As they have been for the past month, gold prices were fairly idle when markets opened on Monday, the first trading day of May. Spot gold was down about 0.1% in early trading in New York, steadying around $1,266/oz. Meanwhile, the silver price was off 0.25% to fall below $17.20/oz.
For the other precious metals, the losses were slightly bigger. Platinum fell 0.5% to $940/oz while palladium slid 0.6% lower to about $820/oz.
The round of volatility seen over the past two weeks has certainly quelled in virtually every corner of the world. This, however, has also meant that equities have been less likely to make large moves to the upside. Stock indices in both Asia and Europe were mixed while Wall St opened modestly higher. Without any "tradeable" news coming in, markets have gone sideways. Several markets in socialist countries around the world are closed today in observation of the international workers' holiday known as "May Day."
Investors shrugged off the latest manufacturing data from China, which were uniformly below expectations but still showed a slight expansion in activity. China's services PMI registered at a six-month low. Elsewhere in Asia, there were reports of another potential provocation by North Korea over the weekend, though the missile launch was supposedly a failure and did little to sway investors. A general consensus seems to have formed that the Trump administration and China have the tense diplomatic situation under control.
Consumer Spending Flat
In a follow-up to last week's GDP data, the Department of Commerce announced on Monday that consumer spending in the U.S. for March was unchanged. This was the second straight month of flat consumer spending and has been attributed to the disappointing first-quarter growth in the economy. The latest government data also show that inflation dipped slightly during the first three months of the year.
As usual, much of the attention has centered on what the new administration and Republican-held Congress are accomplishing during the first 100 days of the new president's tenure in office. While there was little market movement following the bipartisan agreement on spending that will avoid a government shutdown through September, the hypothetical situation of an unfunded federal budget would certainly have sparked volatile action. The legislation doesn't include provisions for a border wall as President Trump has called for, but it does have increased spending for border patrol and the military. It must now be voted on before it reaches the president's desk. In the meantime, legislators are still debating a potential slate of tax cuts and perhaps reviving other White House initiatives like a new healthcare bill.
Although the machinations of the U.S. capitol are dominating the financial news, no matter what else is going on, continued sluggish economic growth in the U.S. can't easily be overcome. This, rather than news from Washington, is what will influence the Fed's decisions on interest rates. The performance of the real economy (more than anything else) will determine where we are three months from now—rather than elections, geopolitics, or general government business.
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.