JM Bullion Gold and Silver Market Update (12/19/16)

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Gold Spot Price Open: $1,138

Gold Spot Price Close: $1,140

Change in Gold Spot Price: +$2

Silver Spot Price Open: $16.16

Silver Spot Price Close: $15.95

Change in Silver Spot Price: -$0.21

To start what will more than likely be a slow week of holiday trading, precious metals were able to halt their respective declines to some extent. When all was said and done on Monday, gold ended up adding about 2 dollars while silver fell marginally at first, but concluded the day down more than 20 cents. Platinum and palladium also started the week off on a rather poor note, but palladium was, by far, the bigger loser of the two.

Gold Edges Upward, but Future Looks Bleak

Precious metals did well to stop their fairly large declines that really picked up steam towards the end of last week, however the near-term future is still not looking favorable for precious metals. Helping gold and silver out today was the one-two punch of weaker global equities and a US Dollar that has pulled back after recently impressive gains.

In case you haven’t been following, last week brought with it some fairly momentous news with regard to US monetary policy. After a lot of waiting on the part of investors, the FOMC finally announced that they would be instituting a 25 basis point increase on interest rates. Though this move was widely expected to be announced last week, it was something that had been patiently waited upon for months and months.

Before the actual announcement was made, the widespread belief was that the interest rate hike had been factored in by investors. Because of this, no one really expected to see any massive reaction to the news. While we did not see any huge upheavals, gold and silver did take noticeable hits respectively. In fact, through the latter half of last week both metals took large, noticeable dives.

The beginning of this week saw metals mostly halt their descent, but that is about the extent of it. The fact of the matter is that the near-term future does not look bright for gold nor silver. Mark To, head of research at Wing Fung Financial Group was quoted as saying that he “…won’t be surprised if gold prices move down to $1,050 to $1,080 by the start of next year.” With pro-business Donald Trump set to take office, people are putting a lot of their eggs into the equities basket. This leaves little room for metals to advance. Though today saw some bargain-hunting buying lift spot values temporarily, there is little reason to believe spot values are going to be able to hang onto or extend the glimmer of progress we saw today.

Expect a Slow Week

Though we alluded to it towards the end of last week, we are already seeing very clear signs that this week of trading will be, in all likelihood, incredibly slow. What we mean by this is that not only will there be a limited amount of trading activity compared to a normal week, there will also be only a few pieces of economic data, most of which will likely be overlooked by investors.

The reason for this is due to the fact that we are at the culminating point of the Holiday Season. With Christmas falling on this upcoming weekend, most people are taking time off work to be with friends and family. As such, the overall level of activity across the global marketplace will be a shadow of what it is at most other points during the year.

For gold and silver, this might not necessarily be a bad thing. Crude oil is still doing well, and if the Bulls can keep their tired legs moving that may lend support to spot values. Of course, after crude oil spot values hit record highs last week, there wouldn’t be all that many people surprised to see the commodity succumb to some profit-taking over the next two weeks.

Wrap-Up

All things considered, the beginning of this week did not turn many heads or offer much in the way of fresh news/data. We are under the impression that the rest of the week will likely carry forward in the same fashion as slow holiday trading become increasingly commonplace in the US and elsewhere.

All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.