Crude oil prices surged closing at above $70 a barrel for the first time in three-and-a-half years, only to have a nuclear meltdown in aftermarket trading. WTI further set a record 2.7 million contracts of open interest but fell hard after President Donald Trump tweeted that he would announce his decision on the Iran nuclear deal on May 8, 2 p.m. Eastern.
The gold volatility index moved to a new all-time low and there was no meaningful action in gold recently. Well, we profited on the decline and on the following upswing, but the price action that we saw was nothing to call home about. For months, gold has been moving around the $1,300 per ounce level and it’s trading relatively close to it also today. But, will this action persist for much longer? Not likely. It seems that something is about to hit the fan.
Despite the falls in buck-denominated gold, silver and copper prices, the U.S. dollar hasn't exactly been strong with the British pound/U.S. dollar (GBP/USD) currency pair and EUR/USD remaining bid throughout the week. But the dollar has performed much better elsewhere.
Thanks to a generally stronger dollar amid heightened expectations of a faster-tightening cycle from the Fed, market participants have apparently reduced their holdings in buck-denominated precious metals.
Gold's stronger showing so far has been in response to several things, including a “risk off” trade that was triggered Tuesday afternoon, but mainly due a weaker dollar. Indeed, something rather odd happened across the financial markets on Tuesday afternoon. Up until 15:00 GMT it had appeared as if it was “risk on” at the start of the New Year: the UK’s FTSE 100 had broken to a new record high, crude oil prices had surged to multi-year highs and the euro/U.S. dollar (EUR/USD) currency pair had dropped to a new 14-year low.
European stocks and the euro rose on Monday, battling back as investors bet that Prime Minister Matteo Renzi's resignation after voters rejected his constitutional reforms would not trigger a snap election in Italy.