Gold Climbs Again As It Ignores Stronger Dollar vs Euro

Gold showed its potency as an investment of independent value today. Regular trading took more than $11.00 higher. Unfortunately for bulls, a stronger dollar knock gold down around $7.00. The yellow precious metal is looking at a $7.00 up-move on the day, or about 0.50%.

Percentage-wise, silver did even better, rising 1.30% on the session.

More impressively for the two heavy-hitter precious metals, it was practically uniformly an off day for all other commodities, except those that move in reciprocity with a partner. (Natural gas was up against falling crude, e.g.)

West Texas Intermediate fell 1.35% while Brent North Sea was off 1.10%. Natural gas rose 5.50%.

The fall in oil hurt equities in New York somewhat but didn’t completely deflate the buoyant sentiment floating around Wall Street. U.S. equities collectively seem to have taken their cue from Europe and Asia. The former reflected growing concern about global growth, the later was hurt by a mishmash of signals coming from China and a stronger yen, which could hurt Japanese exports.

The feistier yen is a result of more recalibration after U.S. economic data has apparently put the kibosh on an interest-rate hike next week when the FOMC meets. We expect there will be some nervous Nellies who will re-recalibrate and guard their flanks should the Fed surprise, but it seems highly unlikely.

The CME’s FedWatch tool shows the likelihood of a rate rise to have come off its sub-2.00% probability to 3.80%. That’s really no change at all.

We say that there is little haven action because of the yen recalibration v. the greenback but also because the 10-year U.S. Treasury bond’s yield slipped again today but that was in the face of a robust 30-year sale.

Normally we would say that the declining yield on the 10-year would indicate better safe-haven demand, but that simply is not the case.

In fact, at the close of session, all three indexes are only marginally in the red.

Wishing you as always, good trading,