Gold prices rallied strongly this morning to probe the $1,180 level from below. Silver leapt upwards more than 2.5% in early trading to break decisively above the $17.00 mark. A wallowing dollar is proving to be no hindrance for precious metals this morning.
The yen, yuan, and pound are also softer today, providing relief to foreign buyers but no support for dollar bulls.
Spot gold hit a high of $1,181 this morning, a gain of nearly $12 an ounce. Spot silver has a firm grasp above the $17.00 level, trading as high as $17.28 an ounce. Tuesday's spot close saw both gold and silver end the day essentially flat. Gold eased 70 cents, while silver shed a mere two cents.
On the futures market, COMEX gold ended $6.40 lower, settling at $1,170.10 an ounce. COMEX silver was unable to keep a three-session rally alive, shedding 8.9 cents to settle at $16.81 an ounce.
Oil prices are down more than 1% this morning, after losses of 2.5% yesterday snapped a four-day rally. That rally began when OPEC and Russia announced a deal to reduce oil production by a total of 1.8 million barrels a day. The resulting elation in the oil market was deflated yesterday, when it was reported that both OPEC and Russia had increased production in November while they were negotiating cutbacks.
In currency markets, the dollar may be seeing some "buy the rumor, sell the fact" activity. MarketWatch yesterday quoted Ken Ford, president of Warwick Valley Financial Advisors, as saying the U.S. dollar appears to be “one of the most crowded trades on the planet right now. So there is a good chance that the trade will reverse as we approach the Fed meeting on the 14th."
The euro seems to be the only currency seeing gains this morning, as most of its rivals have been knocked onto the back foot. Reports that German industrial production gained less than expected weren't enough to pull down the common currency. The British pound is lower after UK manufacturing output fell by 0.9% in October, the worst drop in 8 months. Economists expected a 0.2% gain. A lower yen helped Japanese exporters this morning, even as traders worry that it has been oversold.
The Chinese central bank announced that it had burned through its forex reserves last month at the highest rate since January, and twice as much as expected, in a semi-successful attempt to support the value of the yuan in forex markets. Chinese foreign reserves are now at their lowest point since 2011, but the yuan still remains near 8-year lows versus the dollar.
Equities, on the other hand, continue to revel in the "Trump Rally." The Dow Jones Industrial Average scored another all-time high yesterday for the second day in a row, and the third new record set in the last four sessions. Since the November 8th presidential election victory by Donald Trump, the Dow has set new record highs 11 times in 19 sessions.
The Dow has been helped by large gains in large bank stock prices, especially Goldman Sachs. In addition to the banking deregulation and corporate tax reform promised by Trump, Goldman Sachs will have former employees in some of the highest positions of power in the incoming Trump administration. Steven Bannon, senior White House advisor to Trump, was once an investment banker at GS. Steven Mnuchin, Trump's Secretary of the Treasury nominee, was once a partner at Goldman Sachs.
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