The precious metals opened in positive territory to begin Friday's trading session. Spot gold jumped as high as $1,266/oz this morning before paring its gains to currently trade at $1,262.70 per ounce. Spot silver added 4¢ to return to $16.60/oz. Platinum posted modest gains (+$4) while palladium went the opposite direction, falling by roughly the same amount.
The big economic news that came out on Friday was the first estimate of gross domestic product (GDP) during the second quarter. The Department of Commerce reported that the economy expanded by 2.6% during Q2, a vast improvement over the previous quarter. Nonetheless, this came in just shy of expectations (2.7% expected), and the negative reaction on Wall St seemed a bit disproportionate.
Stock futures pointed sharply lower after the three major U.S. indices tumbled sharply at the end of Thursday's session. While equities in the U.S. remain near their all-time highs, the dollar has not been able to stop its prolonged slide. The DXY index was down to just 93.5 this morning. This undoubtedly helps gold, which is finally beginning to break out of its longest period of low volatility in at least a decade.
The main culprit in any moves for the dollar is its biggest rival, the euro. The common currency was higher again this morning thanks to encouraging GDP growth across the continent. Several countries like Spain, Austria, and France reported better-than-expected GDP numbers; while none of these nations saw their economies grow at nearly the pace of the U.S., they came in above expectations, which is apparently more important to investors than anything else. European stocks were uniformly lower, however.
Struggle in Washington
Returning to the dollar, if there's one thing that currency traders and investors don't trust is uncertainty. Right now, the nation's capital is consumed by uncertainty. Every day, there appears to be more turmoil out of Washington, D.C., either from the legislature or from the White House.
First, the effort to pass healthcare reform in Congress took a major blow after the opposition had just enough votes in the Senate to defeat the current bill. This throws the whole healthcare agenda into question, as senators rejected (by a 51-49 vote) even a stripped-down "skinny" repeal bill that merely removed the most controversial aspects of Obamacare (such as certain taxes that constitute the mandate for people to buy health insurance). President Trump has called on Republicans in the Senate to fulfill their promises to repeal the Affordable Care Act, but the political will to change the system appears to be lacking.
Meanwhile, the newest member of the executive branch staff, incoming communications direction Anthony Scaramucci, has opened a fresh can of turmoil before even officially taking the job. He is a known confidant of President Trump and brings a brash, adversarial, New-York-City approach to public relations that mirrors the president's own style. In an interview with reporters from the New Yorker—which Scaramucci may have be unaware was on the record—he candidly said he wants the FBI in investigate White House Chief of Staff Reince Priebus for potentially being the source of leaks slipping out of the White House. This is not only a serious accusation, but keep in mind that the Chief of Staff is essentially the second-most powerful person in the administration behind the president. Amid a profanity-laden tirade, Scaramucci also suggested that Priebus would be gone soon.
While the fallout from the latest controversy is again consuming the Beltway media, it appears to be just another distraction from other initiatives that are—and, just as importantly, are not—being accomplished by the Trump administration.
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.