Gold loses ground based on the surprising result of the UK elections, as money around the world flees to the US Dollar for security.

UK Prime Minister Theresa May’s plan for a snap election to gain a stronger majority in Parliament backfired. The hope for a more peaceful Brexit from the EU seems no longer possible. Now, with a 'hung parliament', where neither party has a majority in the House of Commons, it is likely that Brexit negotiations will be delayed.

The British pound lost more than 3 percent overnight as the news spread and confidence in the prime minister is faltering. There are calls for her to resign on top of all of the previous angst remaining from the Brexit vote of last year. It appears that uncertainty will remain the status quo in London for some time.

Adding to the stress on gold prices, the ECB lowered their target inflation rate from 2 percent down to 1.5. This put pressure on Eurozone currencies and led to more flight to the US Dollar. Combined with stagnant growth in the top 5 EU nations, even more trading is going toward the more stable US Dollar.

In the meantime, a very interesting development has taken place in the palladium markets here in the United States. The palladium futures market is currently in a state of 'backwardation' which exists when the physical spot price of a metal costs more than its future price to own it. This has occurred before, specifically in the platinum market, and will resolve once new product is infused into the marketplace. However, during this time it is likely that physical palladium premiums will jump significantly and many dealers will cease palladium sales until the market can return to normalcy. If you are trading in palladium markets, please be careful. This market will be highly volatile until more physical product enters the marketplace. This is an unfortunate side effect of having paper metals markets alongside physical markets.

Have a wonderful weekend and I will have more updates for you next week!