The precious metals extended their December slide on Wednesday amid a broader market selloff that included seemingly everything but bonds. Spot gold lost about $2 to fall to $1,263/oz. Gold is still up 8% year-to-date but has tumbled 1.4% in the last month alone. If it ends the day around this level, it will be the lowest gold has traded since early August.
Meanwhile, spot silver was down 9¢ (-0.55%) to just below $16/oz. It was a fresh five-month low for silver, which last traded below $16 in mid-July. The argent metal has only briefly fallen beneath this threshold on rare occasions since the fourth quarter of 2016.
Platinum and palladium went opposite directions: platinum was down 1% to $905/oz and yet its cousin gained 0.6% back to $982/oz, where it began earlier in the week.
Also on Wednesday morning, the ADP employment report showed a slowdown in job growth in the U.S. last month. It indicated that the private sector added 190,000 new jobs during November, considerably less than October. This still modestly beat estimates. The positive news help spur some of the outflow of funds from of the gold market into more speculative corners of the markets.
In fact, the COT (Commitment of Traders) report is revealing that the next few months could be challenging for the precious metals since spot prices for commodities generally follow action in the futures market. The COT is a general gauge for how many traders are long or short on gold in the most-active futures contract. Since the beginning of November, there has been a considerable shift toward the short side—the sellers—in the near-term. Gold futures are only up slightly from their recent four-month lows this morning.
Bonds finally saw some demand as the 10-year Treasury yield fell to 2.33%. The dollar was mostly unchanged, adding less than 0.1% to register just shy of 93.5 on the DXY index. Crude oil prices posted sharp losses, as WTI crude ($56.70/bbl) and Brent crude ($62/bbl) lost about 1.5% each.
Wednesday saw equities pulled back, first in Asia overnight and then in Europe and North America this morning. The Japanese yen firmed 0.3% to ¥112.2, which helped send the Nikkei 225 lower. The euro fell just below $1.18 and the British pound tumbled 0.5% to $1.337 after a potential deal to formalize the Brexit divorce between the U.K. and Europe fell through.
Broader markets will perhaps be a bit more cautious than normal throughout the rest of this week due to a pair of coinciding events that appear to pull in opposite directions: the possibility of government shutdown crops up on Saturday and the monthly nonfarm payrolls report from the Labor Department is coming on Friday. Uncertainty over Congress reaching a deal on spending (to avoid the shutdown) before markets close Friday afternoon could delay any strong market reactions until Monday.
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