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Gold Price Gives Up Early Gains as USD Hits Fresh High

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Gold Price Gives Up Early Gains as USD Hits Fresh High

Both stocks and gold fell at Wednesday's opening bell due in no small part to a new high for the U.S. dollar.

Spot gold touched as high as $1,297 before plunging right back down to $1,289/oz, down by about 0.1%.

The silver price fell by 1.0% (-16¢) to $16.34/oz.

Platinum slipped $6 to dip back below $900/oz while palladium saw steeper losses, plunging $20 per ounce (-2.0%) to $965/oz.

Stocks Fall on Trade Woes

The narrative about improving circumstances in the U.S.–China trade dispute appears to be falling apart.

President Trump all but capitulated on securing a favorable deal, describing the process as "too hard to get done."

Stock futures sank on Wall St in response. The Nasdaq, S&P 500, and Dow were each off by 0.3%.

Yesterday marked the third trading session out of the last four where U.S. equities closed lower.

Meanwhile, the dollar added 0.45% on the DXY index to briefly move above 94.0 for the first time in over five months.

Concerns over how the dollar's strength will impact corporate profits will likely come into sharper focus after the release of the May FOMC meeting minutes this afternoon.

There is a broad consensus that the Fed will raise interest rates another 25 basis points in June. However, it's unclear if the central bank will continue with more rate hikes if the markets respond poorly.

Fears of Slowdown in EU Grow

Across the Atlantic, European markets faced their own difficulties.

Italian bonds continued to experience heavy selling pressure as a coalition of Euroskeptic parties inch closer to forming a government in the continent's fourth-largest economy.

Wednesday also saw the composite Purchasing Managers' Index (PMI) in the eurozone fall to an 18-month low. The data was well below forecasts.

U.S. PMI is expected to come in at a three-year high later this morning.

Shares around Europe tumbled 1.5%. The German 10-year Bund yield shed five basis points to 0.51%, a five-month low.

There was also strong safe-haven demand for American bonds this morning, sending the 10-year Treasury yield four basis points lower to 3.02%.

Stocks were also sharply lower in Asia overnight. Japanese indices were weighed down by a firmer yen. The currency rose 0.75% back to ¥110.1.

Other major currencies fared worse against the dollar. The British pound lost 0.8%, threatening to break below $1.33. The euro slid 0.55% to just a hair above $1.17.

Commodity prices pulled back on Wednesday. WTI crude lost 0.4% to edge back below $72/bbl. Brent crude fell farther, losing 0.7% to trade right at $79/bbl.


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

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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