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Gold Jumps As Stocks Drop

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Gold Jumps As Stocks Drop

Gold prices jumped this morning, reaching for the $1,200 mark after trading flat to start the week. Overnight weakness in precious metals was spurred by upbeat inflation numbers out of Germany, which caused weakness in the euro and British pound. This pushed the dollar into positive territory, limiting the upside for precious metals. Anxiety over possible disruptions of international trade due to protectionist policies espoused by President Trump has both platinum and palladium more than 1% lower in early trading.

Spot gold spiked as much as $8 an ounce shortly after 10am in New York, while spot silver saw modest gains. Both platinum and palladium are down by 1%, but up from early session lows.

This week promises to be even more volatile than first expected, as Trump's surprise ban on citizens from certain Muslim countries causes chaos at major airports. The move has been greeted by mass protests on the East and West Coasts, but Trump supporters in the American heartland wonder what the fuss is all about. After all, they say, Trump promised all throughout the presidential campaign that he was going to restrict immigration from Middle Eastern countries which had an active terrorist presence.

Stocks are seeing their worst start of 2017 this morning, opening sharply lower, then falling more than 1% soon afterward. The Dow and S&P 500 are being weighed down by energy stocks, as traders grow afraid that US fracking operators will erase any oil supply deficit brought on by the "grand bargain" between OPEC and major non-OPEC oil exporters to cut production.

Today's big losses in the equity markets follow a lackluster Friday, which saw the Dow and S&P 500 ran out of steam after a week that saw new records. Most notably was the Dow closing above 20,000 for the first time. For the week, the Dow gained 1.3%, the S&P ended 1.9% higher, and the Nasdaq booked a 1.9% gain. Part of Friday's softness in stocks were disappointing forth quarter GDP and durable goods orders.

Those unimpressive numbers gave Treasuries a boost Friday, with the yield on the benchmark 10-year bond settling 2.8 basis points lower at 2.480%. This was off from the gains it saw immediately after the GDP report.

Three of the four major central banks have monetary policy meetings this week, which is almost guaranteed to add even more volatility to markets. The Bank of Japan and US Federal Reserve both begin two-day policy meetings tomorrow. Both will release their conclusions Wednesday. The Bank of England will meet Thursday.

Another report that traders will anxiously await is the December US non-farm payrolls report on Friday. This will be preceded by the ADP private sector payrolls report on Wednesday. Even though the ADP report does not include data from local, state, of Federal governments, it is considered a bellwether for non-farm payrolls.


The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product

About the Author

Everett Millman

Steven Cochran

Precious Metals Market Analyst
BS University of South Florida (2002)

A published writer, Steven's coverage of precious metals goes beyond the daily news to explain how ancillary factors affect the market.

Steven specializes in market analysis with an emphasis on stocks, corporate bonds, and government debt. He writes a monthly review of the precious metals markets for

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