Gold prices continue to be trampled this morning, as the rally in the US dollar sees fresh bullish signs. The dollar is trading solidly above the 101 mark against a basket of currencies, putting more pressure on gold and bonds. Gold prices hit a nine-month low overnight, before recovering modestly.
Two-thirds of spot gold's losses this morning are coming from the seemingly never-ending dollar rally. The truth is much the same for spot silver. Yesterday, gold prices started strong, but began losing steam shortly after noon. Prices dropped to a session-low of $1,210.40 an ounce early in the afternoon before recovering nearly half of the day's losses. December gold futures lost $7.00 to settle at $1,216.90 an ounce, the lowest settlement since June 2. Spot gold fell $8.70 to close at $1,216.30. December silver futures fell nearly 1%, to settle at $16.772 an ounce, while spot silver lost nearly 2% to close at $16.64.
While the US dollar is on track to hit a new 2016 high today, Treasuries are looking at their worst two-week performance in 13 years. Anticipation of a large amount of fiscal stimulus from the Trump administration is sounding the inflation alert among bond traders. Yesterday, Federal Reserve boss Janet Yellen all but gave the green flag to a rate hike next month, pressuring bonds even further. This pushed the yield on the benchmark 10-year Treasury note up by 5.5 basis points yesterday, to settle at 2.278%. The anticipation of higher yields has raised expectations of substantial foreign capital inflows for US debt. This sentiment pushed the yield on the 10-year German bund back into positive territory last month.
Oil prices are sharply lower this morning, as skepticism rises over OPEC's ability to actually make a production cut pact among its members and some non-OPEC producers. Large gains by the dollar, and stated plans by President-elect Donald Trump to expand US shale drilling are also exerting downward pressure on oil prices.
On Wall St, the S&P 500 ended trading yesterday within shouting distance of another record-high. The Dow and S&P 500 both have been riding bank stocks higher since the presidential election November 8th. Promises of deregulation and loosening of restrictions on the ability of banks to make speculative trades has the financial sector booming.
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