Gold Still Testing $1,250 Level | July 2, 2018
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Gold Still Testing $1,250 Level

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Gold Still Testing $1,250 Level

Spot gold opened lower Monday, bouncing around $1,247/oz after giving up 0.4% (-$5) in early trading.

Meanwhile, spot silver tumbled 1.4% (-22¢) to $15.87/oz, its lowest in about seven months.

Similarly, platinum (-1.9%) and palladium (-1.5%) each fell sharply.

Dollar Rises Again, Stocks Struggle

Monday marked the first trading session of the third quarter. Over the course of the second quarter, gold futures sank 5.5%.

Much of the downturn for the precious metals can be attributed to the rising U.S. dollar.

The picture was just as bleak for stocks, however. Global equities saw $30 billion in outflows last week, the second-biggest weekly decline on record.

Wall St closed barely higher Friday. The Dow Jones remained in negative territory for the quarter and for the year, though the S&P 500 and Nasdaq ended Q2 with gains.

The dollar was stronger when markets opened in New York, recovering from big losses Friday. The DXY dollar index rose 0.55% to 95.0.

Accordingly, the euro plunged 0.7% to just above $1.16 and the pound sterling was down 0.75% to $1.31.

Bonds absorbed a bit of demand as the 10-year Treasury yield slipped two basis points to 2.84%.

More Global Trade Uncertainty

With little other news moving markets, the looming trade war spectacle continued to drive action. The persistence of escalating trade tensions has been dragging equities lower.

Moreover, the dispute is no longer isolated to China and the United States. Protectionist trade strategies have been taking hold all over world, forcing investors to reconsider their expectations for at least another year of "synchronized global growth."

Shares in Asia were down sharply overnight. Although the Hang Seng managed to gain 1.6%, stocks slumped 2.9% in Shanghai and lost worse than 2% in Tokyo.

European markets also traded lower, with most indices down more than 0.5% today. The European Union (EU) is joining the global trade war in earnest, threatening $300 billion in tariffs against the U.S.

Elsewhere in Europe, German Chancellor Angela Merkel is facing political challenges. Germany is the EU's largest economy and often takes a leading role in regional issues, such as the influx of immigrants and the struggle (with the help of France) toward greater European integration. At the same time, Deutsche Bank, the country's second-largest bank, was the only major institution to fail the Federal Reserve's recent bank stress tests.

Politics were also front-and-center in Mexico. The country's newly-elected leftist president has promised to root out corruption in a country that is unfortunately known for corrupt government and policing.

Commodity prices cooled off this morning. After surging to a three-year high last week, crude oil traded lower. Brent crude was off 0.9% to $78.50/bbl but WTI crude lost just 0.25%, trading near $74 per barrel. Prices for crude in Shanghai held around $75.75/bbl.

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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