Gold Sees Volatility Amid Growing Crisis in Italy, EU - Gainesville Coins News
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Gold Sees Volatility Amid Growing Crisis in Italy, EU

blog | Published On 5/29/2018 10:02:19 AM by Everett Millman
©: abluecup / 123RF Stock Photo

Gold prices surprisingly didn't see any strong bids on Tuesday as political drama unraveled in Italy.

Spot gold was off by about $3 (-0.25%) to $1,294/oz this morning. Spot silver sank by 11¢ (-0.65%) to just above $16.30/oz.

Palladium and platinum were a notch above unchanged at $980/oz and $900/oz, respectively.

Political Uncertainty Roils European Markets

After ultimately failing to solidify a new governing coalition, Italy will likely hold new elections later this year.

This came as the Spanish parliament faces its own no-confidence vote. The turmoil is believed to be an implicit referendum on the euro as the region's common currency, as well as a blow to the European Union as a whole.

Shares were down 1.25% across Europe. The euro slumped to a ten-month low, losing 0.6% to $1.157. It's the first time the currency has traded below $1.16 this year.

Italian and Greek bonds were routed Tuesday morning. Italy's two-year bonds were absolutely slaughtered amid the upheaval, with yields moving from just 0.3% to 2.6% in a single day.

There is also fear of a potential contagion, wherein a lack of confidence in the EU spreads around the region.

Yen and Treasurys See Demand, But Not Gold

As investors fled toward safe havens, the 10-year Treasury yield plunged seven basis points to 2.87%. The two-year note also saw strong demand, sending the yield down six basis points to 2.42%.

Somewhat strangely, geopolitics haven't had the same impact on gold prices as is normally expected.

Wall St fell by as much as 0.75% at the opening bell as the drama in Italy unfolded.

Stocks also sank between 0.5% and 1.0% across Asian markets.

For currencies, the weaker euro helped the dollar index rally to about 94.7. The pound dipped 0.3% to $1.327. However, the yen saw some safe-haven bids, rising 0.45% to ¥108.9 per dollar.

The two crude oil benchmarks went opposite directions Tuesday: Brent crude added 0.85% to about $76/bbl while WTI crude lost 1.2% to trade at $67/bbl.

Meanwhile, the Case-Shiller home price index for the U.S. rose 6.8% in March, higher than expected.

On Friday, the monthly nonfarm payrolls report will be released.

 

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.

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