Gold Spot Price Open: $1,230
Gold Spot Price Close: $1,227
Change in Gold Spot Price: -$3
Silver Spot Price Open: $17.14
Silver Spot Price Close: $17.20
Change in Silver Spot Price: +$0.06
Precious metals finished the day on Wednesday mixed, but they were able to mostly retain the gains that were made through the first two days of the week. When all was said and done, gold lost about three dollars while silver managed to gain more than 5 cents. Platinum and palladium finished the day mixed as well, with platinum finishing the day down a few dollars and palladium closed having gained more than ten dollars.
Crude Oil Still A Huge Factor
For yet another day this week, the absence of any economic data is making for a market that is wholly focused on the price action of crude oil. The precious commodity is still hovering around 5-year lows, but now we may have an explanation for why prices are currently so low, as well as an explanation for why prices very well might stay in these currently subdued positions.
Not helping crude oil at all is the recent uptick in the amount of US-extracted crude oil on the market. At present, we are witnessing a record quantity of US oil being sold, and that is a major part of the reason there is a global supply glut. With more oil available on the open market, it is no surprise at all that the price of the commodity is falling. In addition to this, the oil that is extracted from the United States does not carry a war premium. For those who are unaware, a war premium is the additional 10%-20% added to the price of crude oil that is extracted from war-torn countries from the Middle East and Africa.
German Bond Yields Underscore European Economic Woes
During the early morning hours of today, it was reported that the latest two-year bond auction in Germany brought about yields of -.04%. These disappointingly low yields only serve to reiterate the dire situation currently faced by the EU economy. Because Germany is considered to be the EU’s top-performing economy, it is an unnerving sign to see economic performance that is not reflective of a robust economy.
For the United States, the fact that the EU continues to lag behind from an economic growth standpoint is something that may further delay the hiking of interest rates. Time and time again, the US Federal Reserve has made it clear that they intend on raising interest rates only when global economic conditions permit. At present, it is becoming all too obvious that current economic conditions are not such that the Fed will be eager to raise rates. In fact, as the US economy continues to perform well with interest rates at current levels, the Fed may ultimately be convinced to not change rates at all. Of course, this is all speculation because very few people, if anyone, actually know when interest rates in the US will be raised.
Wrap-Up
This week has quickly evolved into one, big 4 day test to see if metals are able to retain relatively large gains. So far, through Wednesday, the answer to that question is yes. Looking ahead to tomorrow, it will once again be interesting to see if metals can continue to benefit from a growing sense of uncertainty regarding the current global economic climate, or if a more severe corrective pullback will bring spot values downward once more.
