Dow Treads Water ahead of Crucial Week for Global Financial Markets
The Dow and broader U.S. stock market hovered near record highs on Monday, as traders shifted their attention to key economic and geopolitical developments later in the week. A shaky geopolitical backdrop and weaker U.S. dollar drove gold prices to their highest levels in six years.
Dow, S&P 500 Hold Near Records
Wall Street’s major indexes traded within a narrow range at the start of the week. The Dow Jones Industrial Average edged up 8.41 points, or less than 0.1%, to 26,727.54. The blue-chip index gained as much as 87 points earlier in the session.
The broad S&P 500 Index of large-cap stocks fell 0.2% to 2,945.35, with losses mainly concentrated in energy and health care companies.
The technology-focused Nasdaq Composite Index closed down 0.3% at 8,005.70.
Gold Notches Six-Year High
The price of gold blew past $1,400 on Monday and reached its highest level in six years, as geopolitical tensions and the expectation of low-rate stimulus from global central banks fueled bullion’s buying frenzy.
Gold for August delivery peaked at $1,421.00 a troy ounce on the Comex division of the New York Mercantile Exchange. The yellow metal was last seen hovering at $1,418.30 a troy ounce, having gained $18.20, or 1.3%. Bullion has rallied by $130 over the past four weeks.
The yellow metal is rallying on the expectation that the Federal Reserve will slash interest rates this summer, a move that would lower the opportunity cost of non-yielding assets such as bullion. Buying from central banks and a weak global growth outlook have also contributed to the rally.
Bullion is also benefiting from haven demand as investors look to navigate around trade tensions and geopolitical hot spots in the Middle East.
The Week Ahead
International summits, geopoliticss and economic data will dominate the headlines this week.
The Organization of Petroleum Exporting Countries (OPEC) will hold its biannual meeting in Vienna, Austria next week, where officials are expected to decide on whether to extend their production cuts. In preparation for those meetings, the Arab-led cartel will meet with non-OPEC allies on June 25-26 and then again in mid-July, according to Reuters.
President Trump and China’s Xi Jinping are scheduled to hold face-to-face meetings at this week’s G20 summit in Osaka, Japan. According to the South China Morning Post, Beijing’s trade team has already laid out its position ahead of the high-level talks.
In terms of economic data, the U.S. government will release its latest readings on durable goods orders and gross domestic product (GDP) later this week. The third and final estimate of first-quarter GDP is expected to confirm annual growth of 3.1% in the period ended March 31.
Featured image courtesy of Shutterstock. Charts via Stockcharts.com and Barchart.com.