Local gold stocks will take another run today as the global gold futures hit their highest levels since the US election on November 8.
Another solid day for gold will help offset any negativity from the second red ink day on Wall Street – although overnight trading on the ASX futures market saw a small rise after two days of big falls on the physical market that carved 2% or more than 120 points from the ASX 200.
Yesterday saw 1.5% sliced from the ASX 200 as it fell to a four month low – and yet traders reckon today will see a small rebound in spite of a sluggish trading session offshore.
Local investors will have to contend with the release of what are expected to be weak first quarter GDP figures at 11.30 am.
Comex gold futures prices extended their recent rally overnight Tuesday.
Spot gold jumped as much at $US12.78, or 1 per cent, to $US1,296.15 a troy once, the highest level on an intraday basis since November 9.
Gold had been battered lower (losing 12%) in the wake of Trumps’ election which raised expectations of higher inflation and growth – which have not happened.
Since the tide has turned with investors now believing Trump will not deliver, and mixed economic data, gold has jumped nearly 15% as US bond yields have tumbled sharply.
The 10 year yield hit 2.14% overnight. That’s down from the most recent high of 2.60% at the start of last December, while short term yields have also fallen, flattening what’s called the yield curve and indicating growing confusion about what is happening in the US economy.
Yesterday saw gold shares firmer amid the 1.5% slide. Newcrest Mining was up 0.9%. Other gold producers like St Barbara, Evolution Mining and Northern Star Resources, rose on the day and will nudge higher again today.
Oil edged higher, ending several weak sessions.
Wall Street dipped for a second session on Tuesday as investors started worrying about the US election tomorrow night, more concerns at the President Trump’s performance and uncertainties associated with former Federal Bureau of Investigation boss James Comey’s testimony to the Senate tomorrow night.
The S&P 500 dropped 6.77 points, or 0.3%, to close at 2,429.33, with consumer discretionary and industrials leading the losses.
The Dow fell 47.81 points, or 0.2%, to end at 21,136.23 and the Nasdaq slid 20.63 points, or 0.3%, to close at 6,275.06.
US retailers took another pounding with Macy’s shares down more than 8% to their lowest level since February 2011, after the company warned that gross margins will be weaker than forecast as the company struggles to shift inventory.
The slide came on top of a big drop in may after a weak first quarter report and poor outlook.
Macy’s warning saw a wave of selling of department store chains, that quickly spread across the retail sector, with Nordstrom shares down 3.6% and Dollar General losing 3.8%.
