The precious metals benefited from a weaker U.S. dollar Wednesday morning.
Spot gold bounced around but held right around the $1,300 level, where traders are seeing strong resistance.
Gold may be stuck in a sideways pattern heading into next week's Fed meeting. The central bank is expected to raise interest rates to the target range of 1.75%–2.0%.
Meanwhile, the silver price jumped 1.4% (+23¢) to $16.70/oz.
Palladium broke above $1,000 per ounce, adding 1.6%. Platinum was up nearly 0.8% to a shade above $905/oz.
Bonds Fall, Trade Uncertainty Looms
Investors swung to more risk-on positions midweek as demand for government debt waned.
Treasurys fell modestly. The 10-year yield was up more than two basis points to 2.95%.
The selling pressure for bonds was much stronger on the other side of the Atlantic. Germany's 10-year Bund yield rose eight basis points to 0.44%.
Italian yields were also up sharply after the country's new prime minister announced plans to ramp up the country's borrowing in excess of what EU budget rules allow.
Bonds were down sharply across Europe in general.
Trade tensions are still a key concern for markets. An expanding trade war could dampen global growth in addition to being a source of political disruption in the West.
Nonetheless, Canada reported its highest exports on record in April. The country's trade deficit narrowed to a six-month low, as well.
Exports from the U.S. also touched a record-high in April according to the Department of Commerce, cutting our own trade deficit to the lowest in seven months.
Productivity growth slowed down in the U.S., however. Worker productivity grew 0.4% during the first quarter, only about half the pace of Q4 2017.
Dollar and Oil Both Down
Aside from the upcoming Fed decision, other central bank news helped move forex and equity markets.
The European Central Bank (ECB) is finally signaling it will wind down quantitative easing in the near future.
This sparked a rally in the EUR/USD exchange rate to $1.177, a two-week high. The pound sterling crossed back above $1.34.
Overall, the dollar index sank 0.3% to 93.6.
Demand for gold abroad diverged from trends in North America. Gold ETFs saw 15 metric tonnes of net inflows during May, primarily into Europe (+26 tonnes) and Asia (+21 tonnes).
North American gold ETFs experienced 30 tonnes of outflows over the month.
Stocks were mixed in Europe Wednesday while Asian shares closed mostly higher overnight.
U.S. indices ended yesterday largely unchanged, although the Nasdaq and Russell 2000 each once again broke new record-highs.
The weaker dollar lifted commodities, yet the slump for crude oil continued.
WTI crude was down 0.55% (-35¢) to $66.15/bbl. Brent crude dipped 0.35% (-25¢) to about $75/bbl. The Shanghai crude price hovered above $72/bbl (461.5 yuan per barrel).
While all indications are that the Trump-Kim summit in Singapore is back on, the timetable for North Korea to commit to disarmament of its nuclear weapons remains unclear.
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