Gold Spot Price Open: $1,212
Gold Spot Price Close: $1,214
Change in Gold Spot Price: +$2
Silver Spot Price Open: $16.60
Silver Spot Price Close: $16.62
Change in Silver Spot Price: +$0.02
Metals made small gains on Tuesday even despite a piece of US economic data that came back better than expected. When all was said and done, gold managed to gain about 2 dollars while silver added just 2 cents. Platinum and palladium also gained on the day, but platinum gained less than 5 dollars while palladium added close to 15.
Existing Home Sales Boosts Greenback
After a bit of a lull to begin the week, the USD Index opened the day stronger on Tuesday. The reasoning for today’s decent performance by the greenback has a lot to do with an existing homes sales report that was much stronger than expected. Right now, any positive economic data coming from the United States is going to bolster the already-strong belief that interest rates are going to be raised come next month’s FOMC meeting.
According to the data released today, October’s existing home sales improved by 2% from the month before. This brings the annual number of existing homes sold to above the 5.5 million mark. What this also means is that October’s existing home sales data is the best we have seen in almost 10 years. This alone was enough to help give the Dollar a noticeable boost.
The Dollar’s performance might have been even better on Tuesday were it not for an earthquake that recently happened off of Japan’s coast. In fact, the earthquake took place right off the coast of Fukushima, where in 2011 an earthquake and subsequent tsunami triggered massive destruction. Back then, safe-haven demand for the Yen drove the value of the Japanese currency up by more than 7% in the tsunami’s wake. This time, there was no tsunami and the Yen’s appreciation against the Dollar was mostly short-lived.
Metals Gain Ground Prior to Thanksgiving Holiday
As if it were not already painfully obvious, there was not much in the way of major activity across the US marketplace. Apart from the existing home sales data, there wasn’t all that much to talk about. What we did see, however, was precious metals benefiting from what are, in truth, very low prices. With spot values beaten down to near 10-year lows last week, bargain-hunters are out this week in full force to snatch up whatever deals they can. In Asia, physical demand has been especially strong over this past weekend and through the first few days of this week.
Crude oil is also helping push metals along. During the overnight hours, crude oil spot values inched closer and closer to the $50/barrel mark. This appreciation on the part of crude oil’s spot value has everything to do with the fact that, on the 30th of this month, OPEC is having a meeting to once again discuss the possibility of reducing daily production of crude oil. Though this is by no means the first time we have heard of a possible supply reduction, it is the first time in a while we have seen such a strong reaction by investors. Perhaps this is the time OPEC does something to reduce the global supply glut, but we are not going to be holding our collective breath.
Wrap-Up
As we have already mentioned, this week was never going to be the source of much exciting news as a result of it being a holiday week in the US. With that being said, gold and silver did manage to eek out small gains today. As we look forward to Wednesday and the rest of this week, it will be interesting to see if metals can continue to make small moves forward, or if interest rate and inflationary expectations will keep spot values subdued.
