Gold Spot Price Open: $1,262
Gold Spot Price Close: $1,255
Change in Gold Spot Price: -$7
Silver Spot Price Open: $17.60
Silver Spot Price Close: $17.43
Change in Silver Spot Price: -$0.17
Precious metals lost on the day, but were mostly resilient in the face of a Dollar that continues to gain strength. When all was said and done, gold lost about 7 dollars while silver declined by more than 15 cents. Platinum and palladium did particularly poorly on Tuesday, with both metals losing about 20 dollars apiece.
Fed Talks Sparks USD
At least once a week for the last year or more we have been talking about the prospect of US interest rates being risen sometime in the near future. Today there was a continuation of that talk as the president of the Chicago Federal Reserve bank made comments about the possibility of interest rate hikes happening in December. In his comments, Charles Evans said that he would support a December interest rate hike, but would like to see how the economy and inflation progress between now and then before speaking definitively one way or another.
At this point, investors are giving it about a 70% chance that rates will be raised come the FOMC meeting in December, expected to be held over the 13th and 14th. For perspective, last week saw investors giving a December rate hike a 65% possibility of happening. If we backtrack a few more weeks that percentage was significantly smaller. Now that so many people are convinced that rate hikes might take place in December, the USD is continuing to gain strength, thus pressuring commodities.
The USD Index alone hit an 11-month high on Tuesday against a basket of other currencies. This further hurts gold because it makes the Dollar-denominated metal more expensive for people who may be purchasing the currency with euros, yen, or yuan.
Investors Await FOMC Minutes Release
A big happening this week will take place sometime late tomorrow morning or early afternoon. The minutes from the FOMC’s latest meeting are going to be released and investors will be looking for any clues whatsoever relating to the potential for interest rate hikes.
With tomorrow’s minutes will come further speculation regarding what the future holds for interest rates in the United States. If tomorrow plays out like the last few minutes releases have, it is highly likely that we will not be any closer to figuring out when, exactly, rates will be touched.
Wrap-Up
Finally, gold and silver were hurt by the fact that Hillary Clinton widened her lead in most major polls. As we have previously touched upon, a perceived Clinton presidential victory is bad for gold because it means, to many, that the status quo will be maintained. A Donald Trump victory, on the other hand, breeds a lot of uncertainty and therefore gives precious metals a bit of a safe-haven boost. We witnessed exactly that on Monday as Trump was generally regarded as the winner of this past Sunday’s debate.
Other pieces of data we have to look forward to include the weekly jobless claims report, which is due out on Thursday. This, along with just about every other piece of US data released in the coming weeks, is going to have a big impact on what the Fed decides to do—or not to do—with interest rates going forward. All in all, the next 2 months are going to be pivotal for both monetary policy in the US as well as the direction of spot values.
