Gold prices hit a stumbling block on Monday morning as investors chose instead to pile into stocks, sending safe havens such as the precious metals into retreat. Spot gold fell about $9 per ounce to $1,311.50/oz this morning, failing at an apparent resistance level at $1,325 per ounce. The silver price slumped as well, trading 1.3% lower (-22¢) to $17.32/oz.
Platinum likewise lost about 0.4% to trade at $964/oz, but palladium actually advanced 1% to about $925/oz.
The atmosphere on Wall St has turned decidedly more bullish as the fourth quarter approaches. Stocks in the U.S. opened in positive territory, notching all-time highs for all three major indices—the Dow Jones, the S&P 500, and the Nasdaq.
The dollar was flat on Monday, trading at just 91.9 on the DXY index. The 10-year Treasury yield rose by 2 basis points to 2.22%. Meanwhile, stocks were up across the board in overseas markets, with the Hang Seng Index in Hong Kong leading the way 1.27% higher.
Japanese markets will be closed for holiday after the Nikkei 225 rose 0.5% overnight. There is some optimism in the Asian markets that the Trump administration will handle the threat on the Korean peninsula without bloodshed. Of course, no clear diplomatic solution has presented itself as of yet. The president is expected to discuss the issue at upcoming meetings of the United Nations General Council later this week.
This brewing conflict and other geopolitical tensions are mostly in the background this week as attention turns instead to the Federal Reserve. This week, the Fed Open Market Committee (FOMC) will hold its September meeting. Traders will eagerly await the transcripts from the meeting minutes in order to parse the committee's words for any clues about the future direction of monetary policy.
If the Fed doesn't raise rates at least one more time before this year is out, it runs the risk that some will begin to question the central bank's credibility. In the past few years, but especially in 2017, the Fed governors have mostly talked up the idea that the time for normalizing policy is nigh. However, such reductions to the Fed balance sheet and an increase in interest rates have not materialized quite yet. With inflation remaining largely subdued, it may be difficult for the Fed to justify making these moves in September. Most analysts do believe, however, that the Fed will hike rates in December—as it has for each of the last two years.
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.