Precious Metals Fall Tuesday | September 11, 2018
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Precious Metals Fall Tuesday

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Precious Metals Fall Tuesday

There wasn't a great deal of movement in the financial markets Tuesday, and the precious metals sank lower with no fresh news to sway short-term investors.

Spot gold fell below $1,190/oz, losing about 0.5%.

Meanwhile, spot silver slumped 0.95% (-14¢) to barely above $14 per ounce.

Palladium dipped $8 (-0.8%) to trade at $967/oz while platinum was only off 0.2% to $783/oz.

Sleepy Markets Await Impetus

It was considered a slow news day in global finance as the hearts and minds of the free world were focused on remembering the September 11th attacks that occurred 17 years ago.

Government bonds have been under the microscope as investors look for signs that trade war conditions are either improving or deteriorating. The 10-year Treasury fell this morning: Its yield rose to 2.96%, adding three basis points.

At the same time, the 2-year Treasury yield is at its highest in a decade (2.73%). This leaves the popular 2-to-10 yield spread rather flat at just 23 basis points.

An aggressive path for higher interest rates could exacerbate the flattening yield curve. Yet this is precisely what many expect the Federal Reserve to do. While higher rates in the near-term could spark market turmoil, the logic behind the move is that it gives the Fed more leeway to cut rates in the event of a future recession.

There are even murmurs from some respected economists that the central bank ought to directly intervene in the U.S. stock market during the next downturn. This is obviously a horrendously anti-free-market idea, even more so than the current experiment with quantitative easing (QE).

Wall St opened roughly 0.4% in the red this morning. The dollar recovered from earlier losses, adding 0.1% on the DXY index to 95.25.

A stronger euro and pound sterling are each placing a drag on the region's equity markets, although both currencies were off of yesterday's highs. Stock indices lost between 0.5% and 0.7% in Europe and Britain.

However, investor sentiment in Germany has surged to new highs in recent months.

Shrugging Off Trade (For Now)

Though there were no major developments on the trade front for markets to respond to, the ever-expanding trade war still looms ominously in the collective background.

China's displeasure with tariffs and duties will soon be heard before an official audience, so to speak. The country is expected to approach the World Trade Organization (WTO) with a request for sanctions against the U.S. for its role in the trade row.

Of course, the move is hardly surprising and comes as President Trump has roundly criticized the WTO.

Elsewhere in Asia, the Japanese yen hasn't seen much safe-haven demand from forex investors. The yen lost 0.25% this morning to ¥111.4 per dollar.

Tokyo's Nikkei 225 index jumped 1.3% higher overnight nonetheless. In China, the Shanghai Composite slipped 0.2% while the main index in Hong Kong fell into a bear market.

Corporate bonds issued by the beleaguered electric car manufacturer Tesla received a downgrade from rating agencies due to the company's very public (and sometimes strange) struggles. Tesla's bonds have performed even worse than its stock, but the tech darling is still expected to reach profitability by the end of the calendar year.

Crude oil prices posted modest gains: WTI crude added 0.3% to $67.75/bbl and Brent crude was up nearly 0.6% to trade at $77.80/bbl.

Business activity along the U.S. Atlantic coast is likely to stall in the coming days as a Category 4 hurricane is fast-approaching the Carolina coast.

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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