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Daily Wrap Up 10 November 2021

10 Nov 2021 04:19 PM

Gold shines despite dollar rally

The strong performance in mining, energy and banking stocks is helping the FTSE 100 to outperform. Metals like gold and silver are enjoying impressive rallies, and in turn that is boosting Fresnillo, one of the largest silver miners in the world. The FTSE has a relatively large exposure to commodity stocks, hence why it is showing strong gains, while the DAX and the CAC are only up slightly. Oil stocks, such as BP and Royal Dutch Shell are showing modest gains, so that is also assisting the UK market. Broadly speaking, the mood in global equities has been downbeat following the bullish moves seen last week.

Over in the US, Tesla continues to be at the forefront of traders’ minds as the stock has been on a volatile ride recently. Shares in the electric vehicle manufacturer fell sharply yesterday due to speculation that Elon Musk, the group’s founder, might sell 10% of his holding. Today, the shares briefly traded below the $1,000 mark, but bargain hunters have swooped in, and the stock is now up over 4%. The S&P 500 is down today but, it is off the lows of the session, largely because of Tesla.

Headline inflation in the US increased from 5.4% to 6.2%, way ahead of the 5.8% forecast. The 6.2% reading is the highest since 1990, which really underlines the surge in prices. Inflation is a hot topic for the Fed, which is partially why the tapering plans were announced last week. Central banks are under increasing pressure to tackle the rising costs of living. The US dollar is higher following the CPI data release and it is not too far from the 13 month high that was registered last Friday. Despite the jump in the greenback, we have seen a break higher in gold. The yellow metal cleared the $1,833 mark, an area that acted as barrier on a few occasions during the summer, and it traded at $1,868 – a level last seen in mid-June. Silver has burst higher too, so it seems there is major appetite for bullion. The upward move in the metals is more impressive by the fact the dollar is up also.

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