Gold Spot Price Open: $1,260
Gold Spot Price Close: $1,253
Change in Gold Spot Price: -$7
Silver Spot Price Open: $17.53
Silver Spot Price Close: $17.38
Change in Silver Spot Price: -$0.15
Precious metals moved downward again on Friday as gold and silver are finding little support from outside markets at the present moment. When all was said and done, gold lost about 7 dollars while silver ended up losing another 15 cents. Platinum and palladium also lost on the day, but both metals’ losses were marginal at best.
Upbeat Producer Price Index Data Dealt
According to the Labor Department, which released positive weekly jobless claims data on Thursday, seasonally-adjusted producer prices rose by .3% in September. When the core producer price data is calculated, it excludes more volatile markets such as those relating to food, energy, and trade. That piece of data also showed a rise of .3%. Being that expectations for the overall PPI called for a .2% rise and the core data to rise by .1%, the marketplace is reacting positively. Of course, as you can expect, this only adds strength to the belief that interest rates will, in fact, be risen come December.
Making the PPI data that much better was the fact that, according to the Labor Department, the PPI from September of 2015 to the end of September a few weeks ago rose by .7%. This is one of the best annualized readings ever, and the best since around this time in 2014.
US Retail Sales Show Improvement
With prices rising, it might lead one to believe that retail sales might not be doing so hot. After all, higher prices to produce goods means higher price tags for those goods, and this is all something that typically deters customers from making purchases. That was precisely not the case in September as retail sales rose right alongside producer prices.
After falling by .2% on a monthly basis in August, September saw retail sales rebound to the tune of a .6% increase. Sparking the increase was a noticeable uptick in the amount of money people were spending on vehicles and, by extension, the gas to fuel those vehicles. Even if you take away sales of gas and cars, however, retail sales still posted a nice jump from August to September.
If we take a wider look at the data, retail sales during Q3 of 2016 were .7% better than in Q2. This is significant because, if you can remember, Q2 of this year saw some really solid retail sales figures. When you compare Q3 2016 to the same time a year before, the growth of retail sales was much greater than 2%.
As far as what retail sales means for the whole GDP, it accounts for about 2/3s. Understanding this, it is easy to see why investors are so happy with the numbers they are seeing. Especially for investors who would like to see interest rates raised in December, this is nothing but icing on the cake.
Last weekend, vice chair of the Federal Reserve Stanley Fischer, had this to say about the overall state of the economy and economic activity. He said, “Household spending has been the main contributor to real GDP growth over the past four quarters, and, with solid gains in employment and household income and upbeat consumer sentiment, this sector should continue to support growth over the second half of the year.”
For investors, this quote means nothing more than that interest rates are going to be hiked very soon.
Wrap-Up
As we look ahead to next week, there is not all that much information on the table. Investors will continue to extrapolate upon any and all US economic data, but given the tone of the reports we have seen recently, it seems as though the case for rate hikes is growing by the day. For precious metals this is not such great news, but subdued prices will keep bargain-hunting strong, and will precent spot values from falling entirely too far.
