Gold prices continued to consolidate on Wednesday amid a slew of new economic data and an uneven performance for equities.
Spot gold tumbled about $10 (-0.75%) to $1,335 per ounce this morning. Spot silver lost 15¢ (-0.9%) to $16.35/oz.
Platinum slipped 0.5% to $935/oz while palladium held steady at $970/oz.
This consolidation pattern is hardly a surprise given the huge gains for the precious metals to close last week.
Still, the fundamentals suggest that there are good reasons to believe the gold price will test new highs in 2018.
Selloff in Tech Sector Renews Investor Anxiety
Volatility is once again gripping global markets as technology stocks have suffered big losses this week. The sector is floundering due to potential new regulations arising from cybersecurity concerns.
Facebook, Netflix, Nvidia, Tesla, and other tech firms saw their shares drag the Nasdaq index down 2.9% on Tuesday. The other U.S. indices each fell about 1.5%.
Even shares of Amazon slumped to a six-week low in early trading today.
In the background, the Department of Commerce reported better-than-expected growth during the fourth quarter. Q4 GDP was estimated at a solid 2.9%, an upward revision from previous estimates. The GDP number was also north of the consensus forecast of 2.7%.
It does appear, however, that growth in the first quarter of 2018 will lag behind the two preceding quarters.
The reading from the fourth quarter was fueled by the biggest rise in consumer spending in three years.
Meanwhile, European equities struggled to find their footing after posting gains yesterday. Germany's DAX index was down 0.7%.
Stocks fell sharply overnight in Asia. Japanese indices lost more than 1%, the Shanghai Composite tumbled 1.8%, and the Hang Seng in Hong Kong plunged 2.5%.
The murmurs about the end of the nine-year bull market in equities are beginning to grow louder.
Bonds and Dollar Rise on Wednesday, Commodities Slump
Investors showed renewed interest in government bonds thanks to the volatile action for stocks.
The U.S. Treasury market saw strong demand as the 10-year yield fell all the way to 2.76%, about a two-month low (or really a two-month high, depending on how you look at it).
This wave of buying of 10-year bonds comes as the Treasury Department will auction $15 billion in two-year T-notes and $29 billion in seven-year T-notes this week.
Most commodities lost ground as the dollar added 0.3% to 89.65 on the DXY index.
WTI crude lost more than 50¢ (-0.8%) to $64.70/bbl. Brent crude was off by 0.5% (-30¢) to $69.80/bbl. Later this morning, the Energy Information Agency (EIA) will issue an inventory report of the U.S. crude supply.
The stronger dollar knocked the yen down 0.8% to ¥106.2 per USD. Both the pound and euro were about 0.3% lower.
Data for pending home sales in the U.S. will also be released this morning. Sales have been thin as home prices and mortgage rates are at multi-year highs.
On trade, the Trump administration struck a revised trade deal with key ally South Korea.
The new trade accord follows fresh developments on the North Korea front, as well. Kim Jong Un just completed a diplomatic trip to China, his first-ever meeting with a foreign head of state.
Beijing reportedly secured the Kim regime's commitment that it will denuclearize as part of a deal to normalize relations with the U.S. The two countries are expected to hold a summit in May.
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