Precious metals’ performance was mixed in May with gold finishing at $1,300.50, down 1.30%, and silver up 0.60% at $16.47. Platinum and palladium finished up 0.75% and 2.40% respectively. The US dollar continued to dominate financial markets this month, extending its already impressive run which began during the second half of April. The US dollar rose 2.30% in May, and reached its highest level since mid-November.
Treasury yields, which had a wonderful April with 10-year notes breaking 3.0%, continued to climb and reached 3.1% by mid-May, a level not seen since 2011. Two-year notes reached their highest level since 2008, topping off just under 2.6%. The rise in treasury yields showed a confident US economy where rising interest rates seemed likely in the near future. This coupled with already falling gold prices because of a thriving US dollar helped suppress any upward momentum gold may have received.
Gold received some respite from rising oil prices which spiked in May due to political instability in Venezuela and Iran combined with already decreasing inventories caused by major oil producing countries agreeing to curb production through 2018. Oil hit its highest level since 2014 with WTI and Brent crude reaching $73 and $80 a barrel respectively. Ultimately, gold was caught between a strengthening US dollar and rising treasury yields and inflationary scares caused by rising oil prices. As oil stabilized in late May and prices began to fall, gold dropped too, finishing the month around $1,300.00.