Gold Spot Price Open: $1,225
Gold Spot Price Close: $1,227
Change in Gold Spot Price: +$2
Silver Spot Price Open: $17.03
Silver Spot Price Close: $16.95
Change in Silver Spot Price: -$0.08
Precious metals didn’t do much moving on Wednesday, but what limited action there was saw metals finish the day mixed. When all was said and done, gold tacked on about 2 dollars while silver lost roughly 8 cents. Platinum and palladium both gained as well, but palladium was the bigger gainer of the two after it added just shy of 15 dollars.
Industrial Production Weighed on by Utilities
This week was never expected to emit a boatload of economic data, but what data has been released has been hawked over by investors who are tired of the continuous speculation with regard to Donald Trump, interest rates, and what the former might mean for the latter. According to a report from the Federal Reserve, October industrial production was unchanged from the month before. While, in and of itself, this was not the worst report in the world, it was surprising as many people expected the data to show at least some sign of growth.
Another reason why this report was more lackluster than anything else had more to do with a downward revision during September. As opposed to a gain of .1% that was originally recorded in September, the Federal Reserve revised the data to show that industrial production in September had actually fallen by .2% from August.
For October, the data being unchanged has almost everything to do with utilities. This Fall has so far been far warmer than expected and this has, in turn, resulted in decreased demand for utilities. Officially, utilities production in October fell by 2.6% after an even worse 3% decline the month before. This alone was the likely culprit for the downtrodden industrial production report we have seen the past two months. At the end of the day, this report likely ended up helping alleviate some of the pressures facing precious metals.
Higher Dollar Continues to Weigh on Metals
The USD Index continued to hover near a 14-month high on Wednesday, fueled still by what many people think a Trump presidency might mean for the US economy. Thanks to the Dollar’s strength, the spot value of gold has lost more than $100 since the announcement of Trump’s presidency. This is something that doesn’t seem to be changing in a hurry, either.
It isn’t only the Dollar that is bringing spot values downward, as continued expectations for a December interest rate hike persist. At this point, it would be a massive shock if the Fed decided to keep rates at current levels. While this would be shocking, it is not unfathomable. Hypotehtically speaking, if the December FOMC meeting came and went without rates being raised, precious metals might be given a strong boost. The reason for this being that, once Trump takes control of the White House, there is no saying how he and his cabinet will feel about monetary policy. Conservatives are typically aligned with keeping rates lower, and a refusal to raise rates in December might scare investors into thinking that rates are going to stay at current levels for the foreseeable future.
Wrap-Up
Wednesday was not the most eventful day, as has been the case all week, but there was some economic data dealt that caused investors to perk up a bit. The market will be anticipating the weekly jobless claims report tomorrow as they always do, but barring any shocking outcome it will likely come and go with little reaction. As we look ahead to the end of this week, I do not anticipate metals moving too far from the range they have traded within all week long. Of course, shocking news coming from president-elect Trump has the potential to change that, but there really isn’t anything else for investors to focus on.
