A stronger dollar makes gold less attractive for other currency holders

US stock markets: Stocks on global indexes rose yesterday, with the NASDAQ and growth names leading gains on Wall Street, while the U.S. dollar strengthened on talk of more sanctions against Moscow following international outrage over Ukraine civilian killings. 

Adding to investor caution, the 2-year/10-year Treasury yield curve remained inverted, signaling to some market watchers that a recession may follow in one to two years. The deaths in Bucha, outside Kyiv, are likely to galvanize the United States and Europe into additional sanctions against Moscow over its invasion of Ukraine. 

Economic Calendar

The prospect of more sanctions boosted oil prices which jumped over 3%. The dollar gained for the third straight session as investors sought safety in the greenback. The dollar is bouncing higher as geopolitical developments have darkened clouds over the global economy. The Kremlin, which calls its action a "special operation," denied accusations related to the murder of civilians.

Dow Jones Industrial Average

The Dow Jones Industrial Average added 0.30%. The biggest gainers of the session on the Dow Jones Industrial Average were Salesforce.com Inc., which rose 3.11% or 6.60 points to trade at 218.85 at the close. Apple Inc. added 2.37% or 4.13 points to end at 178.44 and Intel Corporation was up 2.27% or 1.09 points to 49.20 in late trade. The biggest losers included The Travelers Companies Inc., which lost 1.85% or 3.43 points to trade at 181.82 in late trade. Walgreens Boots Alliance Inc. declined 1.05% or 0.46 points to end at 43.40 and McDonald’s Corporation shed 0.97% or 2.42 points to 246.83.

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NASDAQ 100

The NASDAQ index added 1.90%. The top performers on the NASDAQ Composite were Gbs which rose 67.95% to 1.31, Aterian Inc. which was up 46.78% to settle at 3.42 and IO Biotech Inc. which gained 33.16% to close at 7.55. The worst performers were Curis Inc. which was down 33.33% to 1.62 in late trade, GWG Holdings Inc. which lost 20.97% to settle at 4.22 and Snow Lake Resources Ltd which was down 19.32% to 8.10 at the close.

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Oil price - Crude Oil market, Brent Oil market

Oil prices jumped over 3%, with investors worried about tighter supply as mounting civilian deaths in Ukraine increased pressure on European countries to impose sanctions on Russia's energy sector. U.S West Texas Intermediate crude rose $4.01, or 4%, to settle at $103.28 a barrel. 

Trading was volatile with both contracts rising after being down more than $1. German Chancellor Olaf Scholz said Russian President Vladimir Putin and his supporters would "feel the consequences" of events in Bucha, outside the capital Kyiv, where a mass grave and tied bodies shot at close range were found. Western allies would agree on further sanctions against Moscow in the coming days, he said, though the timing and reach of the new package were not clear. 

France's President suggested sanctions on oil and coal, adding there were very "clear clues pointing to war crimes" by Russian forces. Since Russia's Feb. 24 invasion of Ukraine, sanctions and buyers' avoidance of Russian oil has already dented output and raised fears of tighter supplies.

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Precious and Base Metals - Gold price, Silver price, Palladium price

Gold prices eased today as the dollar held firm on rising prospects of further sanctions against Russia and possibly more aggressive interest rate hikes by the U.S. Federal Reserve to rein in inflationary pressures. Spot gold was down 0.2% at $1,929.31 per ounce. U.S gold futures were up 0.1% at $1,935.50. 

The more liquid something is, the less the volatility. And, if markets are running away from risk, the dollar then becomes a natural haven. Now in real terms, those yields are still negative once we discount break evens. And I think that’s why gold hasn’t fallen more significantly, but if this sort of repricing for a more hawkish Fed continues and we do get positive real rates, I think gold is going to look quite unattractive. 

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The dollar index was steady after three straight sessions of gains as talks of further sanctions against Moscow increased. A stronger dollar makes gold less attractive for other currency holders. U.S. two-year Treasury yields climbed to their highest level since early-2019 and 10-year yields ticked higher on Monday. Higher yields increase the opportunity cost of holding non-paying bullion. During these uncertain times, gold remains supported as a critical portfolio hedge that will shine during the most challenging juncture when inflationary pressures remain strong but growth slows.

Spot silver rose 0.6% to $24.64 per ounce, platinum fell 0.6% to $980.36 and palladium climbed 1.2% to $2,301.05.

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Traditional Agricultures - Corn futures, Wheat futures,  Soybean futures

U.S. wheat, soybean, and corn climbed in yesterday’s trading session, underpinned by disrupted supplies of Black Sea grains as the conflict in Ukraine continues, while attention shifts to U.S production. Ukrainian grain exports in March were four times less than February levels due to the Russian invasion, Ukraine’s economy ministry said, while exporters look for ways to ship grain by rail as seaports remain blocked by Russian forces. 

U.S private exporters reported the sale of 1.084 million tonnes of corn to China — 676,000 tonnes for delivery in the 2021-22 marketing year and 408,000 tonnes for delivery in 2022-23, the U.S Department of Agriculture said. Additionally, 1.53 million tonnes of corn were inspected for export the week ended March 31, near the high end of analyst expectations.

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