Gold Tests $1,200 Level | August 22, 2018
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Gold Tests $1,200 Level

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Gold Tests $1,200 Level

The precious metals absorbed some safe-haven demand Wednesday as a pair of President Trump's former advisors face new legal trouble.

Spot gold was slightly off of its highs above $1,202/oz this morning, trading near $1,198/oz (+0.2%).

Spot silver was unchanged at $14.75/oz and platinum was likewise flat at $795/oz.

Palladium paced the precious metals, gaining 1.1% (+$10) to $922/oz.

FOMC Minutes Due

Source: Slate

Aside from the media fervor over an admittedly embarrassing situation for the White House, the big market news Wednesday centered on the Federal Reserve.

The meeting minutes from the last gathering of the Fed Open Market Committee (FOMC) at the beginning of the month will be released this afternoon. Fed watchers will be parsing the minutes for signs of how hawkish the central bank's outlook for interest rates is currently. Meanwhile, the Jackson Hole summit of the financial elite is set to begin Friday.

Monetary policy has again become a flashpoint for the global economy amid the volatile effects that trade tensions have had on the dollar and the broader foreign exchange markets.

Wall St closed virtually flat yesterday but opened lower on the Trump story. The president's former campaign chairman Paul Manafort and his former business associate Michael Cohen were both convicted of financial crimes—on the same day.

Cohen reached a plea deal with prosecutors while Manafort was convicted at trial. Both men will likely face jail time.

The possible legal jeopardy for the president rattled stocks in the hours before the FOMC minutes were published.


Shares were mixed in Asia overnight. The Shanghai Composite lost 0.55% while indices in Japan and Hong Kong advanced more than 0.6%.

Gold futures on COMEX rose for the fourth consecutive trading session. The gold price in Shanghai settled at 265 yuan per gram, or nearly $1,205/oz.

Stocks were modestly higher in Europe, although Germany's DAX index dipped 0.1%.

Trade Bites Dollar

The dollar index was down again this morning, losing another 0.3% to slip just below 95.0. It could end as the sixth straight session that the U.S. dollar has fallen.

Naturally, the euro jumped back above $1.16, adding 0.3%.

Britain's pound sterling posted more modest gains against the USD, but still moved north of $1.29. This came despite reports that home prices in the U.K. slumped 2.3% month-on-month during August.

Bonds also saw a bit of demand in response to the turmoil in Washington. The 10-year Treasury yield fell two basis points to 2.81%.

Bitcoin broke out of a prolonged losing streak, rallying 3% to briefly trade above $6,800.

Copper being smelted


Gold may finally be on track for a sustained bounce higher as seasonal demand is picking up. Russia added 800,000 troy ounces of gold to its reserves in July, bringing its total to nearly 2,000 metric tons. Purchases of gold in India rose 44.2% year-on-year in July, as well.

Copper prices have also begun to rebound, partly due to the trade conflict with China. The industrial metal is still stuck near $2.70 per pound, however, after losing 0.35% Wednesday.

In other commodity markets, escalating geopolitical tensions with Iran helped lift global oil prices.

Each of the crude oil benchmarks rallied 1.9%. Brent crude was up to $74/bbl and WTI crossed above $67/bbl. Oil futures were also up in Shanghai to 483.3 yuan per barrel ($70.65/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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