Daily Resources Overview
Gold prices are posting solid double-digit gains and hit a nine-week high in midday U.S. trading Monday. Safe-haven demand remains in play to start the trading week and the month, as global stock markets are selling off. August gold futures were last up $14.30 an ounce at $1,325.40. July Comex silver prices were last up $0.168 at $14.735 an ounce.
European and Asian stock markets were down overnight. U.S. stock indexes are modestly down at midday but up from their daily lows. The U.S. stock indexes hit three-month lows overnight and are trending lower.
The ongoing U.S. trade war with China and new worries about a U.S. trade dispute with Mexico have traders and investors jittery. In fact, some analysts are now saying the Federal Reserve will have to lower U.S. interest rates this year to offset a slowing pace of economic growth caused by the trade disputes.
Government bond yields in the U.S., Germany and other countries are on the decline as investors seek out safe-haven assets and shed riskier assets like equities.
The European banking sector has been hit especially hard by falling government bond yields that equate to lower interest rates, which in turn hurt banks’ profits. The eight largest banks in the European Union now have a smaller combined market value than JP Morgan, despite the European banks having three times as many assets.
The Euro zone got more downbeat economic news today when the May manufacturing purchasing managers index (PMI) came in at 47.7 versus the forecast for 47.9. Any reading below 50.0 suggests contraction in the sector.
The key “outside markets” today see the U.S. dollar index trading down. Meantime, Nymex crude oil prices are slightly lower and trading around $53.30 a barrel after dropping to a nearly five-month low in overnight trading.