Gold Rallies On Short-Covering | September 10, 2018
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Gold Rallies On Short-Covering

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Gold Rallies On Short-Covering

Monday morning saw the spot gold price spike higher around 8 am EST to trade back near $1,197/oz. Many traders were caught off guard and forced to cover shorts, placing upward pressure on prices.

Spot silver was up 0.3% to $14.20/oz.

Platinum and palladium each surged higher: platinum jumped 2.3% (+$18) to about $800/oz and palladium rose 1.1% to $987/oz.

Stocks Stage Rebound

Even with this morning's action, the gold market continues to consolidate just below the key $1,200 level.

Meanwhile, stocks are also bouncing higher after a fairly terrible performance last week. The Nasdaq lost 2.55% in just four trading sessions following the Labor Day holiday. It was the worst week for U.S. and European equities since March.

Wall St opened about 0.5% in the green.

Of course, trade war tensions are still hanging over an otherwise robust economic outlook. China is very likely to push back aggressively against any further trade restrictions the Trump administration decides to impose on the People's Republic.

Asian stocks were down again overnight. Indices in Japan managed to eke out gains but shares lost 1.33% and 1.45% in Hong Kong and Shanghai, respectively.

Oil prices moved higher Monday as output in the U.S. has begun to slow and Iran starts to feel the pain of economic sanctions. WTI crude was up 0.5% to inch back above $68/bbl while Brent crude advanced 0.75% to $77.40/bbl.

The crude market may also be responding to an armed attack at Libya's state oil company this weekend left at least two staff dead.

Rate Hike Done Deal?

A popular gauge of bear market conditions is at its highest in roughly four decades. Even if stocks continue to sail along during the second half of 2018, many analysts believe a recession in 2019 is approximately a 50-50 proposition.

Bonds saw little demand as the 10-year Treasury yield held unchanged at 2.94%. Investors would be wise to wait until interest rates go up to buy more government debt; there is a virtual certainty (99.8% according to markets) of a rate hike from the Fed later this month.

The dollar index was off 0.3% this morning to 95.075.

Brexit optimism helped move the British pound above $1.30 (+0.85%). There is hope that the two sides could reach a deal within the next two months. The euro was also up 0.45% to $1.16.

Shares rose about 0.8% in the eurozone but slipped 0.1% in London.

Cryptocurrencies fell again as the sector saw broad-based losses. Bitcoin was down to about $6,300 and Ether traded under $200.

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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