Wednesday morning saw some volatile trading in the gold market, as gold prices fell early in trading before recovering to about unchanged when trading began in New York. Spot gold settled just north of $1,272 per ounce while spot silver gained 1.2% (+20¢) to about $16.82/oz. Platinum gained 0.8% while palladium added about 1.5%.
Not Out of the Woods
Although investors are clearly shifting their focus from safe havens back into riskier assets now, there are still strong fundamentals underpinning the precious metals market. Despite this week's losses, gold and silver still appear to be in a uptrend from a technical perspective. The next major hurdle for the gold price will be breaking above the $1,296/oz mark, a hard resistance level that gold has approached twice recently before falling back. As usual, greater risk appetite is accompanying the decline in safe-haven demand.
Nonetheless, tensions at home after this weekend's violence in Virginia, as well as ongoing anxiety on the Korean Peninsula, could lift gold prices in the coming days or weeks. There is no telling how the DPRK (North Korea) will react to joint military exercises by the Americans and South Koreans next week.
The Trump administration is beginning talks to renegotiate NAFTA today. The free-trade treaty between the U.S., Mexico, and Canada has not been updated since the agreement was finalized under the Clinton administration in 1993. No major changes are expected, but the treaty likely needs to be tweaked to reflect the shifting realities of trade in North America now that NAFTA has been in place for more than two decades.
Another event with the potential to move markets later today will be the release of the July FOMC meeting minutes this afternoon. While the Fed decided against another rate hike at its last gathering, the central bank did suggest that it will begin the process of paying down its bloated balance sheet, which is a big step toward policy normalization as well. It's still unclear, however, how interest-rate changes will play out over the rest of the year. The minutes will be published today at 2 pm ET.
Stocks in the U.S. opened modestly higher on Wednesday morning, joining their counterparts in Europe. Shares in Shanghai and Tokyo closed less than 0.2% in the red overnight, though Hong Kong actually added 0.86%. The 10-year T-note yield moved just one basis point lower to 2.27%. After trending slightly lower during yesterday's session, the dollar recovered ground on Wednesday to move back above 94.0 on the DXY index. This was aided in part by the euro falling below $1.17. (The euro makes up the biggest portion of the DXY currency basket that the dollar's purchasing power is measured against.)
Although the better-than-expected retail sales data reported yesterday for July was encouraging to investors, the numbers were undoubtedly skewed by Amazon Prime Day, the online retailer's own annual version of Black Friday. Many other retailers offered similar competing promotions during the month, giving overall sales a significant boost. Overall, the retail sector is still mired in a broader decline.
Interestingly enough, consumer sentiment remains at its highest level in years thanks to optimism about the third quarter. The Empire State Manufacturing Index came in near a three-year high, indicating some momentum in the manufacturing sector. Meanwhile, new home construction during July was stagnant, especially in apartment complexes, according to the Department of Commerce.
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 or service.