Gold prices popped on the start of trading in New York to test yesterday's highs, as shorts in the futures market moved to cover their positions. The fact that spot gold closed essentially flat on robust volume Monday may also be enticing some bargain hunting on the physical side.
The dollar is making shallow movements above and below unchanged this morning, after closing up a tiny 0.04% against a basket of currencies yesterday. This is removing a headwind against precious metals and other commodities.
December gold futures settled at a one-week low on Monday, giving up $3.10 to end 0.2% lower at $1,341.30 an ounce. September silver lost less than 2 cents, barely registering on the price charts. That contract settled at $19.80 an ounce.
Spot gold also ended nearly steady, dropping a paltry 40 cents to end at $1,335.00. Spot silver prices gained two cents, closing at $19.68 an ounce.
Crude oil contracts settled at a two-week high Monday, on news that OPEC oil ministers will meet on the sidelines at the International Energy Forum being held in Algiers in late September. Oil prices continue to build on that news, and continued successes by Coalition aircraft attacks on Daesh oil smuggling operations. Iraqi sources say that the terrorist army's oil smuggling activity in Iraq has dropped by 90%, through a combination of air and ground attacks.
September WTI contracts settled at $43.02, up nearly 3% for the day. October Brent contracts gained 2.5% to settle at $45.39 a barrel. Analysts attribute the gains to short covering spurred by news of the OPEC talks next month.
Stocks are seesawing on the daily charts, as the usual summer doldrums set in. Wall St is up this morning, after easing back from record highs on Monday. Oil prices and earnings reports seem to be the major factors for equities at present.
Nonetheless, both U.S. indices and the global equities markets were solidly in the green on Tuesday morning.
The pound sterling continues to get pummeled, as the Bank of England tries to cope with signs of a Brexit-induced economic slowdown in the UK. Dovish talk from the BoE's most hawkish member, Ian McCafferty, regarding the need for further stimulus sent the GBP below $1.30 to a four-week low.
McCafferty tried to walk a fine line by suggesting that it is appropriate for the Bank of England to pursue more stimulative, "loose money" policies in order to jump-start the British economy if it lags. However, he stresses that it ought to do so in a way that minimizes the inflationary effect. While this kind of "Goldilocks" approach is largely ambiguous, it still shows that even the hawks are changing their tune regarding quantitative easing (QE). McCafferty was one of only three BoE monetary policy committee members (out of nine) who voted against more QE last month.
With the pound sterling down, both the euro and the Japanese yen were slightly firmer at $1.11 and ¥102 per dollar, respectively.
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