Spot Gold Slumps to $1,265 as Stocks Wobble | June 21, 2018
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Spot Gold Slumps to $1,265 as Stocks Wobble

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Spot Gold Slumps to $1,265 as Stocks Wobble

Despite ongoing uncertainty for stocks due to trade policy, the precious metals fell again Thursday.

Spot gold was still down when markets opened in New York, slumping to $1,265/oz.

Both palladium and platinum were roughly $5 below unchanged in early trading, while spot silver held steady above $16.25/oz.

Dollar Rally Pauses

Manufacturing data from the Mid-Atlantic region was weaker than expected, providing some headwinds for the U.S. dollar.

The DXY index was down 0.2% this morning but still hovered above 94.9.

However, the euro remained stuck below $1.16. Britain's pound sterling rallied 0.6% to move back to $1.325.

Traders reacted negatively to the latest reading of the Philly Fed manufacturing index. The measure fell to its lowest in about 18 months during May.

Equities also were dragged lower. The Dow Jones opened in the red, threatening an eighth straight day of losses.

European stocks wobbled again, dropping 1.1% in Germany and about 0.7% elsewhere.

Japan's Nikkei stood out with a 0.6% gain last night, but stocks fell more than 1% in China and Hong Kong.

Back in the U.S., weekly jobless claims were down by 3,000 to 218,000 new claims last week, according to the Department of Labor.

Bonds saw fresh demand after showing signs of beginning to ease. The 10-year Treasury yield gave back three basis points to 2.91%.

OPEC Unity Fracturing?

The other big news this week is the OPEC meeting being held in Vienna, Austria.

It appears there may be some competing interests among the cartel members. The bloc's most powerful member, Saudi Arabia, even has some conflicting goals within its own ranks.

The Saudis may want higher oil prices in order to support the upcoming IPO of its state-owned oil giant Saudi Aramco. However, increasing output will also prevent OPEC countries from losing more market share to U.S. producers.

Russia and Saudi Arabia seem to be in favor of removing production caps, but any disunity within the group could ultimately push oil prices higher.

Crude oil prices continued to tumble this morning nonetheless. Brent crude lost 1.7% to $73.45/bbl and WTI crude sank 1.2% to trade below $65/bbl. Most other commodity prices were flat early in Thursday's session, however.

On the trade front, German automakers warned that tariffs between the EU and U.S. would be a detriment to the sector. Share prices of BMW, Porsche, and Volkswagen were all down sharply in response.

Besides China and the EU, India is also hitting back with steep duties on U.S. goods.

However, U.S. Commerce Secretary Wilbur Ross has reiterated his support for the Trump administration's trade strategy.

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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