On the last trading session before July 4th, the precious metals rallied off of their recent multi-month lows.
The gold price recovered 0.7% (+$8.50) to about $1,250/oz Tuesday, erasing its losses from the previous day.
Spot silver surged 1.0% (+17¢) to trade just short of $16 per ounce, meanwhile.
Palladium added 0.6% but platinum was the big winner, rallying 2.6% (+$21) to $837/oz. Platinum remains stuck at its lowest in 30 months (2.5 years), however.
U.S. markets will be closed tomorrow for the 4th of July holiday, also known as Independence Day, so expect low trading volumes tomorrow while traders position themselves today ahead of the break. Trading closes at 1 pm EST.
Markets Fret Over Yuan
Whereas the headlines for months have focused on "trade wars," one of the big concerns of the markets during the previous five years or so has been currency wars.
So easily forgotten now, the interventions by the People's Bank of China (PBOC) to keep the yuan cheap against the dollar have long troubled U.S. policymakers. President Trump stopped shy of applying the label "currency manipulator" to China, but he has suggested as much in speeches and campaign rallies in the past.
According to the PBOC, it won't be engaging in any such funny business regarding the yuan (renminbi). The central bank does ensure that the currency doesn't move more than 2% in either direction in a single day. Yet the yuan has continued to slide lower in recent weeks.
Markets seem to believe that China's currency interventions have not hit a critical point yet. One is reminded of three years ago when a surprise yuan devaluation sent global stocks into a tailspin, resulting in the Shanghai Composite index losing half of its value.
This Friday, American tariffs against China will officially go into effect.
Beijing appears to be following these tariffs to their logical conclusion by appealing to the EU to form a trade bloc against the United States. Considering that Washington is reevaluating virtually all of its trade relationships, the unlikely partnership could make sense.
Stocks managed to open higher on Wall St nonetheless. The Dow Jones was up 0.5% in early action but the Nasdaq slipped into the red.
Later this week, the Department of Labor will release the June nonfarm payrolls numbers. The payrolls data will undoubtedly be a major market driver Friday.
Unfortunately, an escalating trade war threatens to plunge the world economy into recession regardless of how healthy other fundamentals appear. This is especially true as the dispute widens to include traditional U.S. allies like Europe, Canada, and Mexico.
Energy markets may ultimately be a bellwether for how the trade tensions progress. Crude oil rallied 1.5% this morning as WTI crude traded back above $75/bbl.
In fact, commodities were higher across the board as the dollar index lost 0.25% to 94.65.
Asian markets were mixed but mostly unchanged overnight. Only Hong Kong stood out, where the Hang Seng sank by 1.4%.
Shares in Europe rallied as much as 1.2% Tuesday morning. Some anxiety was allayed as Germany's Angela Merkel struck a deal on immigration with her party's coalition partners, helping the chancellor avoid (for now) full-blown political upheaval.
Back in the U.S., President Trump is narrowing down his list of potential nominees to fill the vacancy on the Supreme Court. The impending decision has dominated political coverage, surpassed perhaps only by the World Cup in garnering media attention.
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