The precious metals posted solid gains on Monday morning as the dollar sank to a three-year low. The dollar headed for its fifth straight weekly decline even as U.S. markets are closed in observance of Martin Luther King Jr. Day.
Platinum gained 0.4% to trade back at $1,000/oz while palladium was unchanged at $1,115/oz. Palladium has continued to surge on the projection that demand for the metal will continue to outstrip supply for at least the next few years. Palladium is a key component in the catalytic converters that reduce car pollution. However, the auto industry is sinking some of its record profits into developing better electric vehicle technology. This trend could eventually place a damper on the Platinum Group Metals.
All three U.S. stock indices closed at record highs on Friday. Futures pointed higher even with markets shut down for MLK Day. It's worth noting, however, that the Dow Jones is still at its most overbought since 1904. The 10-year Treasury yield settled back at 2.55%. Contrary to what many traders expect under normal conditions, rising bond yields have correlated with higher gold prices lately.
European shares were struggling to break into positive territory on Monday as stocks on the continent were weighed down by the stronger euro. The common currency was up to nearly $1.23, its own three-year high. The British pound also traded close to a two-year high at $1.38.
Asian markets were mostly higher overnight. The Japanese yen posted a four-month high at ¥110.6 against the dollar. The Chinese yuan also notched a two-year high after Germany's central bank moved to include the currency in its foreign reserves. There are once again murmurs of an impending trade war between the world's two largest economies as the U.S. trade deficit with China hit a record high in 2017, up 10% from the previous year.
The weaker dollar helped lift commodity prices as WTI crude oil advanced for the sixth straight trading session to above $64 per barrel. The approaching wedding season in India has boosted the premium on gold and silver sold in the country.
Residents in Hawaii briefly received terrifying news over the weekend when a public employee mistakenly sent out an alert of an incoming missile attack. The worker responsible for the erroneous update has since been reassigned. In Indonesia, an accident at the stock exchange in the capital city of Jakarta left dozens injured.
In addition to quarterly earnings for many major corporations coming through this week, several central banks around the world will hold policy meetings in the coming days. In the U.S., industrial production data will be released on Wednesday while housing starts for December will be reported on Thursday.
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