Gold Spot Price Open: $1,160
Gold Spot Price Close: $1,212
Change in Gold Spot Price: +$52
Silver Spot Price Open: $15.38
Silver Spot Price Close: $16.49
Change in Silver Spot Price: +$1.11
Gold and silver spot values recovered sharply on Monday after late-week and weekend factors caused a sizeable decline. When all was said and done today, gold picked up more than 50 dollars while silver’s gains came in at right around a dollar and ten cents. Platinum finished the day up by nearly $40, but palladium ended near even, having spent most of the day in the red.
Did Dollar Climb Too Fast?
Since the end of last week, the USD Index, which measures the greenback against a number of rival currencies, has been on a steady move downward. Coming directly after the Dollar was hovering near a 5-year high, the Dollar’s recent decline suggests that perhaps investors were far too bullish on the US currency.
Contributing to the Dollar’s decline today was a report from the Institute of Supply Management (ISM) indicating that November manufacturing growth expanded by less than expected as well as less than it did in October. In addition to today’s downbeat US economic data, some investors think that the fact that the Dollar outperformed almost all of its peers for much of 2014 is a reason why we may continue to see some depreciation as a result of profit-taking as the year draws to a close. Despite this, there are a number of underlying factors that will continue to support the greenback as we head into a new year. In essence, this means that while the Dollar may experience pullbacks during the coming weeks, these pullbacks may not be strong enough to outdo the wide array of factors that are currently giving the Dollar support.
One of these areas of support is a weak EU economy. Later this week, we will hear from the European Central Bank in the wake of their upcoming policy meeting, and as it stands now there is a large number of investors who seem convinced that the ECB will be announcing a shift in policy. If the expected monetary policy shift does come to fruition, you can bet that the Dollar will react positively.
Oil Rebounds With Gold as Stocks Decline
Both European and US stocks declined today upon the appreciation of crude oil as well as some news regarding manufacturing in Germany and China.
China’s official factory moved down to just above 50 for the month of November. This was just below the expectations of the market and about in line with how the Chinese economy has been performing as of late. While the world’s top economy is still keeping its head above water, there are some very real concerns regarding the prospects for Chinese growth throughout 2015.
Not helping global equities at all was another report indicating that US consumers spent more than 10% less than expected during the post-Thanksgiving holiday shopping period. This comes in stark contrast to expectations for an above-average turnout of shoppers over the last few days. Though Cyber Monday sales reports have not yet been processed, it is looking as though the holiday shopping season has gotten off to a slow start; much slower than expected, if nothing else.
Focus Turns to European Central Bank Meeting
The European Central Bank is scheduled to meet in Frankfurt on Thursday, and what ECB officials have to discuss is the number one concern for global investors at this point. Currently, a large portion of investors are convinced that we will hear of a shift in monetary policy in the wake of Thursday’s meeting. Specifically, the market is anticipating that the ECB will announce the impending implementation of the purchase of government bonds, also known as quantitative easing. The market has this expectations because, a few weeks ago, ECB president Mario Draghi commented that QE measures are not out of the question quite yet. Adding to this was an OECD report indicating that further spending is what is needed to bring the EU out of these tough economic times.
Though there is no way to tell for certain that the ECB will make this policy change at this week’s meeting, that is what the market currently expects. As such, it will be very interesting to see what actually unfolds on Thursday.
Wrap-Up
With all of the price action recorded today, it is easy to see that we have an eventful rest of the week ahead of us. There will certainly be more US economic data for investors to mull over, most of which will be even more important upon the preliminary determination that Black Friday (Saturday, and Sunday) shopping was a far cry from what was expected. In addition to all of this, now that metals have bounced back, it will be intriguing to see if today’s gains can be retained or even built upon throughout the rest of the week.
