Gold, Silver Prices Advance As Macron's Win Strengthens Euro

Cassie Bastien

5/8/2017 1:18:26 PM

Daily Gold & Silver Market Report – 05/08/2017

On Monday, the euro hit a six-month high against the U.S. dollar after centrist Emmanuel Macron “comfortably won the French presidential election, defeating Marine Le Pen,” Reuters Reporter Swati Verma said. “Leading into the election, with many polls predicting Macron's victory, we saw safe-haven buying easing into end of last week. Confirmation that he is victorious has not resulted in any additional selling,” ANZ analyst Daniel Hynes said. Verma reports “Prices have fallen over 5 percent since hitting a five-month high of $1,295.42 [per ounce] in mid-April.” However, Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo, said, “Gold is still pretty much wanted after last week's fall...People are happy to buy around this level.” In addition to Gold prices, Silver also advanced in reaction to France’s election. Recently, many have noticed Precious Metals taking a hit as risk aversion evaporated from the financial markets in favor of equities. Economic Calendar market analysts Sam Bourgi says, “With Le Pen’s defeat, Frexit risks have all but diminished – at least, for the time being.”

• The dollar index added 0.3 percent to 98.90 through the morning session.
• The euro made a first high above 1.10 U.S. at the start of Monday trading; the currency was last down 0.5 percent at 1.0954 U.S (EconomicCalendar.com).

Euro Rallies to 6-Month U.S. Dollar High

It was not only Emmanuel Macron's victory “but the scale of it that should help deliver a significant boost to sentiment on Monday morning in Europe, notwithstanding a quite low turnout,” Forbes contributor Roger Aitken said . Neil Wilson, a senior markets analyst at City of London brokerage ETX Capital, said, “The result sends a loud signal to investors that political risks in France and across Europe are receding and that is undoubtedly supportive of European equities and the euro.” Nevertheless, Aitken says “while things may appear stable for the time being, it is perhaps a case of when - not if - the next crisis in euroland emerges.” Although the election is out of the way, the key is if Macron’s win combined with improving economic data is enough to make the European Central Bank believe risks are no longer ‘tilted to the downside’. Furthermore, Aitken says “investors will also be looking beyond the sentiment to consider what proper reforms the new French president can enact to ignite his nation’s frankly sclerotic economy.” All that being said, what this election does not alter, Aitken says, “is the kind of fundamental matters that affects the French economy.” Keeping in mind that one-third of French people still favor Le Pen over Macron, it would appear populism, and the associated market risks, has not been defeated.

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

• Gold, $1,229.80 Up $0.70
• Silver, $16.36 Up $0.01
• Platinum, $922.20 Up $10.00
• Palladium, $813.40 Down $4.70

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