Tuesday morning saw an early rally for the gold price that briefly sent the market above $1,260 per ounce before slipping back to about $1,257/oz, which was still 0.3% higher than where it started the session. Spot silver was roughly 0.4% higher to trade right at $18.30/oz.
Stocks opened mixed, both in the U.S. and abroad. The dollar managed to nudge 0.1% higher against its major peers, rising to 100.65 on the DXY index. Platinum and palladium prices were up about 0.5% and 0.75%, respectively.
In addition to growing concerns about the viability of the prolonged surge in stock valuations we've seen to begin the year, markets are also showing some trepidation about weaker economic indicators in the U.S.
An interesting dynamic has emerged that should alert investors to the potential for a market downturn. Consumer spending data showed a rather lackluster level of spending by Americans last month. Although the weaker-than-expected numbers were not dramatically out of line with normal patterns, they don't square with measurements of consumer sentiment. Even though Americans report the highest optimism about the markets in well over a decade, their spending habits don't seem to match this high degree of confidence.
Such a disconnect could be a sign that the risk of a downward correction is looming over Wall St. Economists certainly give a great deal of weight to consumer confidence surveys, but actual consumer behavior tells us more about what to expect from the economy than subjective gauges of sentiment. It's telling that safe havens such as gold and Treasurys have attracted renewed demand over the past week or so.
Another key data point that may worry the markets were weaker sales of automobiles in the U.S. during March. Much like the housing market, auto sales are an important—albeit limited—snapshot of broader economic trends. Considering that Q1 was the best quarter for U.S. stocks since 2013, consumer optimism and high-growth expectations may have gotten ahead of themselves. The one standout in the auto sector was Tesla: the electric automaker saw its shares jump better than 7% on Monday, vaunting it to the second-most valuable U.S. car company in terms of stock price. However, the firm has yet to establish itself as a large-scale producer of its electric vehicles, revealing yet another worrisome disconnect between equity valuations and the real performance on the ground.
What to Watch For
There are a number of crucial developments that the markets will digest as the first week of Q2 progresses. According to Bloomberg, "Investors are taking stock ahead of a key U.S. payrolls report on Friday and minutes from the Federal Reserve’s latest meeting on Wednesday."
There are a number of crucial developments that the markets will digest as the first week of Q2 progresses. According to Bloomberg, "Investors are taking stock ahead of a key U.S. payrolls report on Friday and minutes from the Federal Reserve's latest meeting on Wednesday." In addition to Friday's nonfarm payrolls (April 7th) and the release of the FOMC minutes on Wednesday (April 5th), the European Central Bank (ECB) is also slated to publish its most recent meeting minutes this week. In between, on Thursday (April 6th), the much-publicized confab between President Trump and Chinese President Xi will begin.
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.