Gold Prices Hit 3-Week Low

Cassie Bastien

5/2/2017 1:17:35 PM

Daily Gold & Silver Market Report – 05/02/2017

The yellow metal officially hit a three-low closing point “following U.S. data that imply a strong rebound in second-quarter economic growth,” MarketWatch Reporters Myra Saefong and Mark Decambre said. With recent geopolitical risk, especially across Europe, starting to settle down, safe-haven assets such as Gold prices have followed, as Precious Metal prices thrive on uncertainty and volatility. Sevens Report Co-Editor Tyler Richey said, “When headlines began to cross about a 4.3 percent Q2 reading in the Atlanta [Federal Reserve's] ‘GDPNow’ model forecast, there was a sharp drop in both Treasuries and Gold futures.” Strong economic growth can mean tighter monetary policy and increased rates from the Fed, which “can boost the dollar and make Gold prices less competitive against interest-bearing investments.”

President Trump’s Promise of 4% Lowered to 3%

During his campaign, President Donald Trump promised his economic agenda would amp up American economic growth to 4 percent. However, since taking office, he has lowered his growth plan to a more reasonable 3 percent. However, former Federal Reserve Chief Ben Bernanke thinks Trump is unlikely to deliver even that goal saying, “I would say it’s a pretty long shot. ... We're in a slow-growth world now,” pointing to an aging U.S. workforce, low productivity and a global savings glut. CNN Money reporter Matt Egan said, “The former Fed chief's outlook is way more subdued than Wall Street's, as evidenced by the Trump rally in the stock market.” But Bernanke warned that “politically it's going to be a much slower process -- and a more limited process” than investors may realize. Still, he broadly supports policies such as tax reform and infrastructure spending, both of which are pillars of Trump’s agenda. Looking at the creation of over 16 million jobs, an unemployment rate of 4.5 percent, stable inflation and healthy stock and housing markets, Bernanke said, “All those things are looking good. If you'd told me three, four years ago this is where we'd be, I would have been pretty happy.”

Crude Oil Prices Begin Recovery

Oil prices recovered Tuesday as European data was generally encouraging, even on pressure from concerns over global demand trends. “A weaker-than-expected U.S. ISM manufacturing reading increased doubts surrounding U.S. growth trends and potential oil demand,” Economic Calendar Reporter Tim Clayton said. “There were further expectations that OPEC would agree to extend production cuts into the second half of 2017, although there will inevitably positioning and uncertainty ahead of the May 25th OPEC meeting.” There are still concerns surrounding Chinese growth as the Caixin PMI reading declined to a seven-month low. Prolonged slowdown in Chinese growth would undermine demand and make it more difficult to curb excess global stocks. Clayton said, “U.S. inventories will come back into focus in the short term with the latest American Petroleum Institute (API) data due on Tuesday and the Energy Information Administration (EIA) release on Wednesday. Consensus forecasts are for a further decline in headline crude inventories, but with expectations for a further increase in fuel stocks.”

• Oil prices came under pressure Monday from Libyan reports that crude output had reached 0.76 million barrels per day (bpd), the strongest level since December of 2014.
• Russia reported April output fell slightly to 11.00 million bpd from 11.05 million in March.

At 2:18 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,257.60 Up $0.80
• Silver, $16.89 Down $0.01
• Platinum, $926.30 Down $6.90
• Palladium, $819.30 Down $0.20

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