After largely holding their positions over the last few uncertainty-filled weeks, the precious metals fell through support this morning, as gold lost more than 1% to slip below $1,160/oz and platinum slid 1.5% to about $1,050/oz. Palladium slumped more than 2.5% lower to $665/oz, while silver led the downward charge at 3.3% lower, $15.30/oz. The stronger dollar is helping push the metal prices down further. European shares were down again as well as markets await some new development in the Greek crisis.
UPDATE: After Greek officials looked to delay the submission of a new proposal to their European creditors, Wall St sank to about 1% in the red, while the precious metals continued to tumble: Gold: $1,154.40/oz (-$16.40, -1.40%) Silver: $14.97/oz (-$0.88, -5.56%) Platinum: $1,041/oz (-$27, -2.54%) Palladium: $649/oz (-$35, -5.15%)
Yesterday in the Markets
Stocks opened in the red with Greece remaining on the brink of a collapse of its financial system. U.S. indices closed about 0.30% lower, while much of Europe spent the day nearly 2% in negative territory. While gold and silver were up modestly (+0.35%), platinum and palladium were battered about 2% lower. The crude oil market saw a rout, as Brent crude and WTI lost 5.9% and 7.4%, respectively. The 10-year Treasury saw demand, sending yields lower to 2.28%.
Factors Affecting Gold Today
The euro will likely continue to suffer until the mess in Greece moves toward a more sustainable path. The euro hit a 5-week low against the dollar at just $1.09, while the pound sterling hit a 1-month low at $1.54. The DXY surged 0.9% to 97.15, which is the main factor placing downward pressure on gold today. The dollar also forced oil prices about 1% lower this morning after yesterday's sell-off. Wall St opened in the red this morning on mixed economic signals: home prices rose during May at their fastest pace in 10 months, but the trade deficit also widened nearly 3% with a robust dollar holding back exports.
Although spot prices took a tumble this morning, and gold's near-term technical forecast is for more losses, the brewing geopolitical tensions around the globe likely spell some support for the precious metals. Not only does Greece remain embroiled in a sticky stand-off with its creditors, but now the wheels have fallen off of China's stock market, and the Iran nuclear deal continues to drag on in deadlock.
The Chinese government has frozen trading for 26% of the shares on mainland exchanges, totaling a staggering $1.4 trillion in market capitalization (21% of the entire Chinese market). By comparison, just 0.2% of the market capitalization of U.S. shares is frozen from trading. The Shanghai Composite lost another 1.3% today, while Hong Kong's Hang Seng index fell another 1% to officially enter a bear market. Though the government intervention has staved off even more losses and somewhat shielded the global economy from the Chinese meltdown, the 30% drop in 3 weeks for Chinese equities will undoubtedly begin to impact global equities in the coming weeks.
Elsewhere in Asia, the new deadline for the Iran nuclear talks approaches, putting the pressure on the Western negotiators to hammer out an agreement that has some teeth. With another deadline likely to be pushed back, the oil market is likely to suffer further with oodles of crude oil idling off the Iranian shore, waiting to hit the market if and when economic sanctions that have halved Tehran's exports are rolled back. Expect crude prices to track with the news on a nuclear deal.
In addition to the EIA petroleum status report, the FOMC meeting minutes from June will be released tomorrow afternoon.