Gold Spot Price Open: $1,225
Gold Spot Price Close: $1,223
Change in Gold Spot Price: -$2
Silver Spot Price Open: $17.45
Silver Spot Price Close: $17.40
Change in Silver Spot Price: -$0.05
After Wednesday and Thursday’s gains, precious metals seem to be holding steady to close out the week on a quiet day of trading on Friday. When all was said and done, gold lost a marginal two dollars while silver declined by just a few pennies. Platinum and palladium also finished the day on Friday trading downward, but by no more than $10/ounce.
Have Equity Markets Topped Out?
A major theme in the marketplace this week is whether or not US equity indexes have topped out and are preparing for a shift downward. Stocks have been selling off for much of the week, and equity indexes hit fresh 2-month lows during the early morning/overnight hours today and yesterday. If equity markets continue to trend downward through the first part of next week, investors may grow increasingly convinced that equity markets have, at least in the near-term, topped out.
If the overall confidence in US equities begins to diminish, there is no doubting that cash will flow from equities and into other asset classes, specifically precious metals. Being that there is a growing risk-off attitude being exhibited by investors ever since the release of the Fed’s dovish minutes on Wednesday, gold and silver may stand to benefit over the coming days and weeks.
Advancing Dollar Limits Gold’s Progress
The US Dollar is performing extremely well to close out the week, fueled by recent pieces of economic data indicating that the US economy is, in fact, improving. So long as the data from the US remains positive, it is likely that the Dollar will continue to make gains. Unfortunately for precious metals, the Dollar’s progress through late Thursday and into today has done well to limit buying interest and, in fact, has caused spot values to retreat a bit.
James Cordier, of Optionsellers.com, put it bluntly when he said, “The dollar is much stronger today, and gold is consolidating its gains.” The Dollar has always been a key rival of precious metal’s, and despite there being a general risk-off attitude taking over the market, the progress of the greenback will almost always prevent gold and silver from moving too far upward.
The ECB is Feeling the Pressure
Though this week did not bring about too much in the way of global economic data, it did bring us some particularly poor German industrial reports. For one, a report released mid-week showed that German factory output in August declined by more than 4%. As a leading EU economy, investors from around the world look to the strength of the German economy as a means of gauging the overall strength of the Euro Zone collection of economies.
As we head into the coming days and weeks, the eyes of the world will be on the European Central Bank and what, if anything, they do in order to combat the slowing growth of the EU. As it stands, deflationary pressures are a major concern not only for the economies of Europe, but also for the US economy, as cited in this week’s FOMC minutes.
Wrap-Up
All in all, this week was a positive one for precious metals as both gold and silver were able notch weekly gains for the first time in almost a month. Next week, it will be interesting to see if the precious metals market will be able to continue to benefit from the current risk-off attitude, or if the stronger US Dollar will end up piling on the selling pressure once more. In addition to this, investors will be clambering to take note of any and all economic data coming from the EU, as it is of particular importance at this point in time.
