Gold and other markets await bond auction outcome


Gold, along with the stock and bond markets, are trading tentatively this morning awaiting the outcome of the Treasury Department’s auction of $52 billion two and five year notes – an offering bond market participants described as “massive” earlier in the week. The benchmark yield on the 10-year note closed at over the 3% mark yesterday and remains firm at that level this morning. Any weakness in demand could push rates higher as the day progresses with consequent effects on the rest of the financial markets.

Gold is down $9.50 in the early going at $1322 in the FOREX market and attempting to gain traction while silver is down 17¢ at $16.60. The dollar is equally entangled in the bond market drama, but slightly higher this morning with strength against the Japanese yen the most notable factor. Japan’s central bank chief Kuroda a few days ago made it clear that the Bank of Japan would continue full on with its quantitative easing program for the foreseeable future – a choice that kicked the stool out from under the yen.

Chart of the Day

Chart courtesy of

Chart note: It pays to have a little perspective and this chart offers plenty. As you can see, despite all the hoopla in the financial media about a strong dollar in recent weeks, the real story is its weakness. The related story is gold’s strength – up 15% since January, 2017 – even with the current price weakness taken into account.

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