Gold Gains On Drop In Equities And Weaker Dollar

Stocks were looking for an excuse to fall back and they found one in weaker crude prices, which weighed on U.S. markets.

Gold took advantage, rising over $16 with $13.50 accounted for by regular trading. The rest was due to dollar weakness. Silver picked up 2.00% or 41 cents on the day and both platinum and palladium were strong. Palladium bumped up about 2.00%.

The Dow snapped its nine-day winning streak and the S&P 500 fell off to 2165, still a very robust level. The NASDAQ, too was off, but we don’t feel as if there was any definitive statement made in equities on Wall Street given that the losses were under half a percent on each index.

The Nikkei was strongest of the Asian indexes on rumors that Japan’s stimulus is going to exceed forecasts. Shanghai and Hong Kong benefited from Tokyo’s reflected strength on the day.

Squabbling over how to handle the Brexit broke out and that hurt the FTSE, slightly dented the CAC and kept a lid on advances on the DAX.

Crude fell on news – discussed here yesterday – of an unexpected surge in gasoline stockpiles. And, while there was good indication that crude oil reserves were falling steadily (if a bit slowly), we should remember that both oil and gasoline reserves are at a historical high.

The market is technically weak, inventories are still high for summer, maintenance season is not far off and we have floating barrels at sea to top it all," said Pete Donovan, broker at Liquidity Energy in New York.

The reason for all this finds its roots in poor demand, although supposedly consumers in China are picking up their purchasing pace.

There was firm demand for U.S. Treasury issues based on similar sentiments that governed gold and the rest of the precious metals complex.

There is a good deal of unrest and uncertainty in Europe, whether you focus on the UK and Brexit or the disturbing developments in Turkey. As minor as it may seem, the threats to the Olympics in Brazil and the economic uncertainty circulating around the games adds fuel to a burning fire. (Someone has financed those bonds down Rio way, you know.)

We are only days away from the next FOMC meeting on the 25th, and that will begin to push views on interest rates around for a while. Until then, they will fall as there is a bit of haven passion in the air.

Wishing you as always, good trading,