After threatening to tumble to fresh lows for much of the last two weeks, the precious metals carried over their rally from Friday and traded solidly higher again on Monday. Spot gold was up almost $6 an ounce this morning to $1,234.30/oz, or roughly 0.5% higher. This marks a two-week high for the yellow metal. Meanwhile, spot silver added 16¢ (+1.00%) to trade at $16.12/oz.
Platinum added 1%, as well, to approach $930/oz while palladium was unchanged around $855/oz.
Before diving into the news, here are Friday's closing numbers:
Gold: $1,228.40/oz (+$11.10, +0.91%) Silver: $15.95/oz (+28¢, +1.82%) Platinum: $919/oz (+$17, +1.88%) Palladium: $854 (+$2, +0.23%)
WTI crude: $46.66/bbl (+58¢, +1.26%) Dow Jones: 21,637.74 (+84.65, +0.39%) S&P 500: 2,459.27 (+11.44, +0.47%) Nasdaq: 6,312.46 (+38.03, +0.61%) DXY: 95.11 (-0.67%)
China GDP Beat
One of the major drivers for markets to start the week was Monday's report of China's second-quarter GDP. The Chinese economy expanded by a robust 6.9% during Q2, beating expectations of 6.5% to 6.8%. There is some speculation that the better-than-expected growth could spur reforms in China's financial sector, especially in regard to reducing its increasingly alarming debt burden. The GDP data helped lift the yuan to its strongest level since November 4th, an eight-month high.
Stocks were mixed across Europe and Asia this morning, as the stronger currency caused shares to fall in Shanghai. U.S. indices were likewise mixed. The dollar remains stuck near 95.0 on the DXY index, which was unchanged Monday morning at 95.16.
Empire State Manufacturing
In other U.S. data, the Empire State Manufacturing index reported by the Federal Reserve Bank of New York dropped sharply for July's reading. which showed some growth (i.e. the index was in positive territory) but at a far slower pace than the month previous. It's worth noting that June saw the index hit a two-year high, however.
Unsurprisingly, the news media is beginning to pay more attention to the creeping problem in the auto market with a wave of subprime car loans now going into default. Much like the subprime mortgage fiasco, lax underwriting of car loans to unqualified buyers has led to an unhealthy rate of default. Of course, considering the price of a car relative to a home and the fact that repossession of an automobile is less messy than a foreclosure, the scale of this "subprime boom" is no doubt less menacing than its counterpart in real estate. Nonetheless, it could represent a larger trend in lending that should worry investors.
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.