Gold Spot Price Open: $1,235
Gold Spot Price Close: $1,240
Change in Gold Spot Price: +$5
Silver Spot Price Open: $17.53
Silver Spot Price Close: $17.50
Change in Silver Spot Price: -$0.03
Precious metals ended Wednesday mixed on a day when risk-aversion seems to have finally taken hold of the marketplace. When all was said and done, gold finished up about 5 dollars while silver ended the day near unchanged, having lost only a few pennies. Despite gold and silver’s gains, platinum and palladium finished the Wednesday having conceded some value.
Slew of Factors Combine to Create Risk-Aversion
Today, and over the past week or two for that matter, risk aversion has become a theme across not just the US marketplace, but the global marketplace as well. With things such as poor EU economic growth, the Ebola pandemic, declining crude oil prices, and, just today, poor US economic data, making rounds, investors are growing increasingly worries.
This growing sense of uneasiness on the part of global investors has fueled the safe-haven demand for US Treasuries as well as precious metals. While the US Dollar is typically on the end of safe-haven demand as well, today’s poor economic data drove the greenback downward. As we head into the next few weeks, it will be interesting to see if gold, silver, and other metals are able to hang on to recent gains, or if they will par recent gains somewhere down the road.
Poor US Economic Data Pushes Stocks, the US Dollar Downwards
Shortly after US markets opened today, things remained generally calm and precious metals were seen trading near even. Shortly thereafter, however, a batch of economic data seemed to flip the relatively calm market atmosphere on its head. According to one report, US retail sales, on a monthly basis, fell by .3% during September. In addition to this, a separate report indicated that the United States’ producer price index fell by .1% during September. Both of these declines were not at all expected by the market and, in turn, caused the value of the US Dollar as well as US equities to tumble quite considerably.
By day’s end, the USD Index, which measures the greenback against a basket of rival currencies, had fallen by more than 1.1%; a quite large single-day decline. What’s more, the Dow, Nasdaq, and S&P 500 were also trading in the red by the time markets closed. The fact that stock markets ended the day so far downward did little to quell investor fears with regard to recent equity market volatility. Fortunately, the fact that investors are being scared more and more with each passing day only seems to be benefiting the spot values of gold and silver, which are both on course for yet another weekly gain.
Worrisome Inflation Data Out of China
As if today’s poor economic data and the large number of other worrisome factors wasn’t enough, an inflation report out of China was reported as being none too impressive. According to the report, China’s year-on-year inflation was said to be at 1.6% in September; the lowest inflation reading in more than 4 years.
The report leads one to believe that not only is demand for Chinese goods on the decline, but also that dangerously low inflation levels may soon be a mainstay in the Chinese economy.
Wrap-Up
As we look ahead to the last two days of the week, it is likely that investors will keep their eyes on the same factors that they have been all week long. If things remain the same, there is no reason to believe that precious metals will not continue along their recent upward trend.
