Gold is leading the charge in precious metals this morning, as markets react to British Prime Minister Theresa May's speech laying out plans for a "hard Brexit," and President-elect Donald Trump smashes the US dollar lower by saying that it is too strong.
Spot gold prices are more than $13 an ounce higher, while spot silver is marching above the $17 mark. The Platinum Group Metals (PGMs) are clawing back recent losses, with platinum prices up modestly while palladium is up by nearly 2%.
With US markets closed yesterday for the Martin Luther King Jr. holiday, any action on gold occurred overseas. Spot gold gained $5.70 to close at $1,202.60. Spot silver eased by two cents to end at $16.78. Platinum was flat at $981 per ounce, while palladium gave up $6. Physical gold sales in London have been up sharply to begin the year, as investors worry over stock market volatility, a crash in home prices, and Brexit uncertainty.
Gold saw some profit-taking after hitting a daily high of $1,217.80, but quickly turned higher again after the Empire State Manufacturing report from the New York Fed showed an unexpectedly steep drop. This month's 6.5 on the gauge after a 9.0 reading in December was far below expectations of 8.1. The NY Fed slashed that December 9.0 down to 7.6, adding to the bad news.
Oil prices are also getting a lift from the Trump-trigger fall in the dollar. West Texas Intermediate (WTI) contracts for February delivery are comfortably back above the $53/barrel level, after gaining 0.5% Monday to settle at $52.64. March Brent oil futures are up 1.4% this morning after gaining 0.7% yesterday.
The US dollar was hit by remarks from Donald Trump this morning. He said that the dollar is too strong, and laid part of the blame on China for manipulating the value of the yuan lower. Conversely, the British pound is seeing its largest daily gains since before last year's Brexit referendum, as Prime Minister Theresa May announced that Parliament will get the final say on any plans drawn up to leave the European Union. The pound rally comes a day after its worst performance since the October "flash crash," seeing it briefly slide under 1.20 to the dollar before settling marginally above that mark.
The stock market did not like Trump's bashing of the dollar, opening sharply lower and continuing to fall. Other recent pronouncements by the President-elect, such as threatening a 35% tariff on German-made cars, have equity markets scared that he could ignite a global trade war, pulling down most economies as international trade is choked off.
On a positive note, US carmakers seem to have taken the hint from recent attacks by Trump for outsourcing car manufacturing. GM announced that it will be investing $1 billion in its US operations, which should add 7,000 American jobs.
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