Precious Metals Creep Higher Again | September 6, 2018
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Precious Metals Creep Higher Again

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Precious Metals Creep Higher Again

After gold futures closed back above $1,200 for the first time in two weeks, the spot gold price rose modestly again Thursday morning. The yellow metal traded near $1,203/oz, up 0.5%.

Spot silver was basically unchanged from yesterday, hovering around $14.20/oz.

Palladium was likewise flat near $970/oz while platinum added almost 0.8% (+$6) to $790/oz.

Labor Market Chugs Along

The unemployment rate has been under 4.0% in the U.S. for much of this quarter, and the positive news kept on rolling in Thursday.

First-time jobless claims compiled each week came in lower again this morning at 203,000 new claims. The weekly unemployment filings are now at their lowest in about 49 years.

Tomorrow, the Labor Department will release its monthly nonfarm payrolls (NFP) report. The ADP payrolls numbers rose by less than expected.

The dollar was down just a tick nonetheless, falling below 95.1 on the DXY index.

Both the euro and pound were accordingly up against the greenback. Each of the currencies were lifted by a potential breakthrough in Brexit negotiations: Germany and the U.K. have supposedly eased up on certain demands as part of the agreement, perhaps opening the door to a more timely settlement of the issue.

Similarly, there also appears to have been progress in the negotiations between the U.S. and Canada over the future of NAFTA.

Wall St still opened mixed. Durable goods orders in the U.S. sank by 1.7% last month while new factory orders also fell short of expectations.

European stock markets sank to their lowest in five months despite being barely below unchanged in early trading.

Asian indices closed in the red overnight as shares in Shanghai lost another 1.0%.

While equities have lost a bit of steam already in September, gold may finally be building momentum. Prices are coming up against key resistance levels. The response in the bullion market in the coming weeks could determine whether the precious metals can break out of their slump before the end of the calendar year.

The benchmark gold price in Shanghai was up to 265.5 yuan per gram, or $1,209/oz.

Selloff in Emerging Markets

An index tracking emerging markets fell for a seventh straight session as anxiety over trade has spread to virtually every corner of the globe. This pushed the index to 20% below its highs from January, which many analysts consider an "official" onset of a bear market.

Trade tensions are continuing to drag stocks lower in developed markets, as well, but not with quite the same intensity.

Naturally, China has threatened to retaliate against any new tariffs imposed by Washington. It's worth noting that President Trump could unilaterally decide to eliminate this string of tariffs and trade barriers, which gives the U.S. greater leverage in negotiating international trade deals.

Iran is similarly exploring more ways the country can circumvent U.S. sanctions as its economy struggles to stabilize.

Demand for safe-haven assets held in check as the 10-year Treasury yield was steady at 2.90%. Meanwhile, the leverage in the paper gold market has reached a new all-time high: There are now 295 "ounces" of gold traded on the COMEX for every ounce of physical gold in its vaults.

Investors living in emerging markets are still turning to gold amid a wave of depreciating currencies. India's gold imports hit their highest in 15 months during August as the Indian rupee has slumped to an all-time low against the dollar.

Most commodities nudged higher due to the breather for the dollar. Shanghai crude for October delivery was down slightly to 501.5 yuan/bbl ($73.43 per barrel). Both WTI crude and Brent crude were slightly higher.

Bitcoin endured another selloff Thursday. The leading cryptocurrency has shed about $800 in value in the course of just two days. This dragged virtually all altcoins down sharply, as well.

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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