Precious metals are reversing their recent trends this morning, with gold giving back gains notched yesterday, after hitting a 5-1/2 month high. The platinum group metals have finally seen some bargain hunting, as both platinum and palladium are up around a half-percent in early New York trading. Silver is the odd man out this morning, continuing its downtrend.
Easing geopolitical tensions are the main cause for back-filling in gold this morning. Spot gold is down $5 an ounce to start the US trading day, after closing at $1,289.20 an ounce on Tuesday. Gold's hit intraday high of $1,293.00 an ounce yesterday, fueled by tough talk from US vice president Mike Pence regarding North Korea. The news that a US Navy carrier task force had not actually received orders to reverse course and sail towards North Korea reduced the perceived odds of a unilateral strike by the United States against the "Hermit Kingdom's" nuclear weapons program.
Gold saw a sudden drop around 10 am Tuesday morning, pushing prices down by $7 to below $1,280. This unleashed some buying on the dip, which erased that dip within 30 minutes, and had prices hitting daily highs a half-hour after that.
On the futures market, June gold recorded a fifth day of gains to settle up $2.20 at $1,294.10 an ounce - a 23-week high, and its highest close since before the November 8th US Presidential election. May silver futures lost 1.3% to settle at $18.27, while both PGMs recorded yet another loss. July platinum ended $12.20 lower, and June palladium was down 2.2%, losing $17.55 on the day.
In oil futures, both West Texas Intermediate and Brent crude contracts finished lower, even though industry trade group the American Petroleum Institute reported a hugely bigger drop in US oil stockpiles. WTI ended the day 24 cents lower, to settle at $52.41 a barrel. Brent contracts ended the day 47 cents lower, to $54.89 a barrel.
Initial shock over the surprise call for snap elections by British prime minister Theresa May have subsided, but the pound has managed to hold on to big gains against the dollar after rising 1.6% yesterday. Stocks in London are down again this morning, with the FTSE 100 continuing a sharp downtrend on the monthly chart. The British blue chip index saw its worst day in 10 months on Tuesday.
Wall St opened higher this morning, after disappointing earnings from Goldman Sachs and Netflix. The Dow closed down by 113 points yesterday, with 70 points coming solely from the shares of Goldman Sachs plummeting on missed earnings. The S&P 500 closed 0.3% lower, while the Nasdaq Composite ended the day marginally in the red.
Yesterday's surge in the pound was the major contributor to the hammering the US dollar received. The DXY dollar index lost 0.5% to push it under the psychologically important 100 level. The greenback is modestly higher this morning, but still well below the 100 mark.
Treasuries saw a big safe haven play Tuesday. Between signs of a weakening economy, worries over elections in the UK and France, North Korea's nuclear ambitions, and Trump's focus on international affairs pushing back hopes for bank deregulation this year, there were plenty of reasons to buy, buy, buy, buy a bond.
Heavy demand for the benchmark 10-year Treasury note saw its yield fall 7.1 basis points, to end at 2.177%. This was the largest drop in 10-year yields in a month, and the lowest yield since November.
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