Gold prices are just above unchanged this morning after hitting a two-week high overnight. February COMEX gold futures closed $5.10 higher yesterday, and spot gold closed $10.00 higher, in spite of a slightly stronger dollar. The dollar is seeing substantial gains this morning, putting heavy pressure on precious metals.
Spot gold is trading unchanged this morning, giving back gains seen overnight when the price broke above the $1,144 mark. Spot silver, which closed at $15.85 yesterday, is consolidating around that level in preparation for another run at the $16 level.
If gold can hang on to gains today, it will extend its winning streak to three days. While that may not sound impressive in normal circumstances, the huge rally in risk assets since the election of Donald Trump has presented precious metals and bonds with their greatest challenge of the year.
The DXY dollar index was up nearly 0.5% in early trading, working to regain its recent 14-year highs. The euro fell on concerns that a collapse of the Italian banking sector would take the entire EU financial system down with it. These fears have driven safe-haven demand for German bonds as well. The British pound hit 2-month lows this morning, mostly because of gains in the dollar, rather than weakness in the pound. The DXY rose 0.1% Tuesday to close with gains for the second day in a row.
Stocks opened higher on Wall St this morning, and immediately dropped into the red. A report that pending home sales dropped 2.5% to a ten-month low in November put a damper on investor sentiment. The Dow and S&P 500 barely closed up yesterday, notching 0.1% and 0.2% gains, respectively. The Nasdaq rode a 0.6% gain to a new record. This morning's downturn has extended the Dow's "20K Watch" as traders look for the blue chip index to break above this psychologically important level to hit all-time highs.
Oil prices are trying to extend their winning streak to four days today, as West Texas Intermediate futures continue to have trouble holding on to prices above $50 a barrel. Both WTI and Brent settled 1.7% higher on Tuesday, as statements by various OPEC oil ministers help the markets maintain optimism regarding production cuts that will take effect after the first of the new year.
Bond prices were down and yields up yesterday in reaction to tepid demand for the $26 billion in 2-year bonds auctioned by the Treasury Department. The yield on the 10-year and 30-year T-notes are marginally lower this morning, but the yield on the two-year note is still rising. Short-dated bonds are affected more by short-term interest rate movements than longer-term debt.
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