Short And Sweet Regarding Gold: It’s all about the Dollar Today

The U.S. dollar is up more than1.00% against the euro today, squashing gold down, despite the fact that in regular trading gold gained 0.35%. Overall, though, the yellow metal was down $8.50.

Silver also suffered, off almost 3.00%. It was hit by dollar strength and found no relief from regular trading.

The super-dollar’s strength cut through the other currencies like a hot knife through butter, sending the yen and Swiss franc down, as there seemed to be no need for haven plays.

The yen was down 1.50% and the franc was off 1.00%. The British pound also fell against the greenback.

Traders are convinced that the interest rate rise long promised, long feared and long put off is finally going to arrive in mid-December. That is what might loosely be called a secular raise, one that will be enacted because of very general conditions in the markets and in economic data. Employment has been building and wages have risen modestly higher. But the Fed tries to anticipate its inflation curve, not get behind it.

However, there is a non-secular fear in the markets. We can see it in lower bond face prices and zooming yields. The cause of this fear stems from genuine concern that, indeed, even the next president and the Republican-controlled Congress will spend too much money and a new round of debt may be like the proverbial straw that broke the camel’s back.

Some traders have already given it a name: “Trumpflation.” The yield on the U.S. 30-year bond hovers right below 3.00%, a bright orange flag ready to turn red. The10-year is up around 2.25%. We are going to have to monitor this very carefully because higher yields affect the price of gold and the price of equities.

Today the stock indexes had an off day for the first time since last week’s election. (The Dow Jones Industrial Average had a slight gain on the day that was its sixth in a row.) The S&P 500 was stagnant and the tech-heavy NASDAQ fell.

The NASDAQ slipped by 0.4% as Apple plus the FANG stocks fell. (Fang = Facebook, Amazon, Netflix and Google, the latter really Alphabet, Google’s parent.) 

U.S. crude oil was down 9¢ per barrel at settlement but has since recovered in after-hours trading and is up 28¢ or 0.65%. Brent North Sea fell marginally.

Next bogey on the radar screen? Housing. Watch yourself if you’re heavily invested in housing equities.

Wishing you as always, good trading,