Gold Up, Stocks Near Record Highs | August 9, 2018
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Gold Up, Stocks Near Record Highs

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Gold Up, Stocks Near Record Highs

Markets searched for a clear direction Thursday as U.S. stock markets were poised to climb higher in early trading.

The precious metals actually posted gains when trading opened. Spot gold was up modestly to $1,215/oz.

Platinum added 0.8% (+$7) to $837/oz while spot silver rose 5¢ (+0.3%) to $15.45/oz.

Palladium stood largely unchanged at $890/oz.

PPI and Jobless Claims

A pair of economic reports were released Thursday, perhaps providing new fuel to stock prices.

First, jobless claims fell by 6,000 to 213,000 last week, according to the Department of Labor. It's the first time in three weeks that jobless claims have dropped.

© Alexmillos

In addition, the latest reading of the Producer Price Index (PPI) fell short of expectations. The index came in at unchanged during June, suggesting that wholesale prices have more room to rise.

If inflation does continue to accelerate, most analysts expect companies to pass on the higher costs to consumers.

Bonds saw a bit of renewed demand this morning. The 10-year Treasury yield was down two basis points to 2.94%, stubbornly holding below the key 3.0% level.

Meanwhile, Wall St closed mostly unchanged Wednesday. Indices continue to trade near record levels.

European bourses saw a mixed performance Thursday in the meantime. The same was true in Asia: Shares were down 0.25% in Tokyo overnight, yet the Shanghai Composite rallied another 2.5%.

Dollar vs. Yuan

Despite its recent gains, the main Shanghai index has tumbled sharply in the face of increasingly harsh tariffs from Washington. However, this has partly been offset by a weaker currency: The Chinese yuan was down to 6.8 per dollar Thursday, about 6.25% from its highs in May.

Aside from playing a role in the trade war, the yuan (also known as the renminbi) has shown an exceptionally strong correlation with the gold price lately. It would seem that the CNY and gold will have similar fates until the trade war's impact on the dollar has run its course.

The dollar has undeniably been on fire this summer, but there are reasonable indications that the greenback could pull back during the fall months.

This morning, the dollar index made up some ground from its overnight losses, rising slightly to 95.2.

Most other major currencies were about flat against the USD.

U.S. economic sanctions against Russia have also emerged in parallel to the growing tensions over trade.

In fact, it's as if the entire region is being targeted for economic warfare. Oil prices were higher as a separate set of sanctions against Iran are set to take effect once again. Both Brent crude and WTI crude were up about 0.5%.

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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