Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% Upgrade now

Opening Bell: Gold Zooms Past Historic $2,000 Level; Futures, Stocks Rise

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewAug 05, 2020 12:20
uk.investing.com/analysis/opening-bell-gold-zooms-past-historic-2000-level-futures-stocks-rise-200444913
Opening Bell: Gold Zooms Past Historic $2,000 Level; Futures, Stocks Rise
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 05, 2020 12:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
CL
+4.36%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/CNH
+0.51%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MIAP0...
+0.10%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MSCIEF
+0.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
STOXX
-1.13%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
JP10Y...
-2.40%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Stimulus hopes buoy equities, futures
  • Gold shoots past $2,000 milestone, first time ever
  • Yields remain near record low

Key Events

On Wednesday, US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000, as well as European stocks, all priced in progress toward an agreement on the next US stimulus package, even though the rhetoric from Congress and the Trump administration indicate an ongoing stalemate. Positive earnings also helped lift shares.

After breaking the $2,000 level Tuesday, gold's bull run continued this morning, as the precious metal continues to hit successive, new, all-time highs. Yields crept higher but remained near record lows.

Global Financial Affairs

All four contracts for the major US benchmarks were solidly green this morning, albeit with an interesting twist—technology-heavy NASDAQ futures have been underperforming while contracts on the Russell 2000 rose 0.9%, twice that of tech which usually leads markets and recently spearheaded global rallies.

The Stoxx Europe 600 Index climbed, boosted by commodity and retail stocks. Counteracting the rally, shares of Bayerische Motoren Werke AG (DE:BMWG) plunged 2.5% after the German automobile manufacturer posted its first loss since 2009.

During the Asian session, most regional indices finished higher, though Australia's ASX 200 and Japan's Nikkei 225 both finished in the red.

Tuesday, American stocks crawled higher on hopes of a resolution to the coronavirus relief bill. Pressure on both Democrats and Republicans from millions of constituents is growing, with many now no longer receiving additional unemployment benefits and over 40 million at risk for eviction.

Still, the two sides were hardly any closer to agreement, though negotiations are ongoing. According to White House Chief of Staff Mark Meadows: “Secretary Mnuchin is prepared to make a few proposals that hopefully will be met with enthusiasm, and yet we’re a long ways away from, from striking any kind of a deal.” 

The S&P 500 Index eked out a 0.3% gain. Rising crude oil boosted energy shares, while financials took a hit with insurer American International Group (NYSE:AIG), falling after reporting a $7.9 billion loss.

We can't seem to shake the feeling that the market is headed for a reckoning, even with—or perhaps in spite of—stocks now back to pre-pandemic levels, and the rally's leader the NASDAQ achieving yet another record, even as gold hits its own new record. It's clear the market is pricing in stimulus even though that's not necessarily now guaranteed. Nevertheless, whether that's going to happen or not investors on one side of that bet will win big, while those who made the wrong choice, will lose big.

Despite the equity rallies, yields, including for the 10-year Treasury note, moved higher.

UST 10Y Daily
UST 10Y Daily

Though rates rose noncommittally, they remained within a falling channel, still just two basis points above the March 8 record low.

The dollar rebounded slightly and moved into positive territory.

DXY Daily
DXY Daily

Two trends collided as the USD moved higher: the downtrend since this year's March high and the uptrend since the March 2008 bottom. In the above chart, note the steeper uptrend line since 2011, when that trend spiked higher.

Gold hung on to its massive advance after yesterday pushing comfortably past the $2,000 benchmark, for the first time. Traders who waited patiently for months for this much-anticipated move—which includes us—may have been handsomely rewarded.

Gold Daily
Gold Daily

Technically, the top of the rising channel—a previous line demarcating where sellers overcame buyers—is expected to flip to a support, as market dynamics reverse.

Still, that other precious metal, silver, however, provides considerable more value and much less risk, at this point.

Oil jumped 1.8%, extending a rally to the fourth day, after a massive blast at Lebanon’s main port rocked Beirut, raised concerns about fresh instability in the Middle East.

Oil Daily
Oil Daily

Technically, the price of WTI found a dual resistance: the broken uptrend line and the 200 DMA. For now, the commodity remains at the highest level since March 6, one session before the mind-boggling falling gap that wiped out a quarter of its value, now a presumed support.

Up Ahead

Market Moves

Stocks

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%.
  • The euro increased 0.2% to $1.1827.
  • The British pound gained 0.3% to $1.3105.
  • The Japanese yen was little changed at 105.69 per dollar.
  • The offshore yuan strengthened 0.3% to 6.9515 per dollar.

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 0.52%.
  • The yield on two-year Treasuries climbed less than one basis point to 0.11%.
  • Germany’s 10-year yield gained one basis point to -0.55%.
  • Britain’s 10-year yield advanced one basis point to 0.085%.
  • Japan’s 10-year yield dipped one basis point to 0.012%.

Commodities

  • West Texas Intermediate crude gained 1% to $41.94 a barrel.
  • Brent crude increased 0.8% to $44.71 a barrel.
  • Gold strengthened 0.6% to $2,031.36 an ounce.
Opening Bell: Gold Zooms Past Historic $2,000 Level; Futures, Stocks Rise
 

Related Articles

Opening Bell: Gold Zooms Past Historic $2,000 Level; Futures, Stocks Rise

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Radu George Giusca
Radu George Giusca Aug 05, 2020 12:29
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Good report. thank you. 👍
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email