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Precious Metals Surge, Stocks Fall

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Precious Metals Surge, Stocks Fall

Stocks took a breather on Wednesday, prompting many investors to "buy the dip" in the precious metal prices. This propelled the gold price about $10 (+0.8%) higher to $1,285/oz. Spot silver gained 15¢ (+1%) to trade at $17.07/oz.

Both platinum ($931/oz) and palladium ($1,002/oz) were also up better than 1.2% in early trading.

These were Tuesday's closing numbers for stocks:

Dow Jones: 23,572.52 (+24.10, +0.10%) S&P 500: 2,588.15 (-2.98, -0.12%) Nasdaq: 6,763.84 (-22.60, -0.33%)

stock market © Jan Miks | 123rf.com

Worse-than-expected earnings from big banks and other financials dragged Wall St and most of its international counterparts lower on Wednesday morning. Shares were mostly lower on the European mainland, although the FTSE 100 in London did move just a notch above unchanged. Equities in Asia were down overnight as President Trump continues his trip across the region by visiting China.

There are growing murmurs about potential delays to the push for tax reform in the U.S. Congress. Aside from the disappointment of another failed legislative initiative by the GOP, the absence of tax cuts after nearly a year of anticipation would surely deal a blow to the corporate outlook in the States, thus sending stock prices tumbling. Beyond the economic implications of reforming the U.S. tax system, the situation remains politically fraught.

Across the pond in Great Britain, a different kind of controversy is plaguing the administration of Prime Minister Theresa May. A second minister may resign or be fired from May's cabinet this week after accusations of sexual harassment drove the country's defense minister out of office. Amid the turmoil, Brexit talks are set to resume this week between the U.K. Brexit Secretary and the chief negotiator from the European Commission (EC).

The British pound sterling tumbled 0.6% against the USD as the situation at 10 Downing Street unfolded. Sterling traded below $1.31, just barely above a two-month low. Although the dollar was flat at 94.9 on the DXY index, the euro remained stuck below $1.16. The Japanese yen made up ground on the greenback, trading at ¥113.6 per dollar. Even in the absence of a particularly stronger dollar, crude oil fell for the second straight day as the WTI crude price held above $57/bbl.

The 10-year Treasury note hit a three-week high as the yield fell to 2.31%. Similarly, benchmark 10-year bonds in Germany and the U.K. both saw sufficient demand to push yields down to two-month lows.

 

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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