Gold Prices Slip On Fed Day | August 1, 2018
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Gold Prices Slip On Fed Day

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Gold Prices Slip On Fed Day

All eyes were on the Federal Reserve Wednesday, although the central bank is expected to stand pat on its benchmark interest rate.

The precious metals all fell in early trading. Spot gold slipped 0.2% to $1,221/oz after ending yesterday in positive territory.

Spot silver lost 0.35% (-5¢), trading back at $15.44/oz.

The Platinum Group Metals posted bigger losses. Palladium shed 0.85% to trade near $920/oz while platinum slumped 1.8% (-$15) to $822/oz.

Fed Meeting Wraps Up

Federal Reserve headquarters, Eccles Building, Washington D.C. (photo: Federal Reserve)

Today marks the conclusion of the FOMC's two-day policy meeting. It will be followed with a written statement from the committee at 2 pm ET.

By all indications, more rate hikes are coming from the central bank this year. Nonetheless, most analysts expect the Fed to leave interest rates unchanged this month in the absence of a post-meeting presser from Chair Powell.

Fed watchers will be carefully parsing a single phrase in the Fed's statement: the possible inclusion of the words "for now" in reference to the FOMC's plan of gradual rate hikes over the next 18 months or so.

In other news, the Department of Labor reported that weekly jobless claims came in at 219,000. This is up slightly from multi-decade lows.

Aside from the Fed decision, the frothing trade war remains a vulnerable spot for markets. Around the globe, the brinkmanship over trade and tariffs has already begun to hurt growth at factories.

None of the principal participants in the trade dispute—the U.S., EU, and China—appears ready to back down yet. Multiple complaints have already been formally filed with the World Trade Organization (WTO).

Elsewhere on the trade front, officials in Canada and Mexico are hopeful that a new NAFTA deal will be struck soon. Negotiations over the unpopular trade agreement have dragged far beyond their intended end date in early summer.

Equities Mixed Wednesday

Stocks on Wall St opened a bit higher after advancing about 0.5% yesterday.

However, equities were lower across Europe in part because of the aforementioned trade standoff. Most indices on the continent were down about 0.4%. London's FTSE 100 lost 1.1%.

Market action was likewise mixed in Asia overnight. Shares in Japan rose about 0.9%, but the Shanghai Composite closed down 2.0%.

Oil prices were also down Wednesday. Both WTI and Brent crude lost more than $1, sliding 1.5% and 1.85%, respectively.

The slump for oil couldn't be blamed on the dollar, however. The USD held flat on the DXY index at 94.5. Its peer currencies were likewise little changed this morning.

Amid the seasonal drought in gold demand that typically occurs during the summer months, the yellow metal remains considerably oversold in the futures market. Similarly, after losing ground for seven straight weeks, silver futures are stretched to the downside. These are usually taken as indicators that a rebound is imminent.

Bonds fell fairly sharply in early trading. The 10-year Treasury yield added four basis points to 3.00% while the three-month T-bill saw its yield jump to a fresh 10-year high.

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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