JM Bullion Gold and Silver Market Update (12/27/16)

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Gold Spot Price Open: $1,137

Gold Spot Price Close: $1,141

Change in Gold Spot Price: +$4

Silver Spot Price Open: $15.81

Silver Spot Price Close: $15.95

Change in Silver Spot Price: +$0.14

Gold and silver began what is, for all intents and purposes, the first trading day of the week in impressive fashion before backing down in response to upbeat US economic data. When all was said and done, gold managed to add four dollars while silver moved upwards by close to fifteen cents. Platinum and palladium both moved upward, but platinum was bumped up by only a dollar or two while palladium added more than 15.

Upbeat US Economic Data Pressures Metals

During the overnight and early morning hours of Tuesday precious metals were moving noticeably higher, but upon the opening of US markets and the release of some US economic data those highs were kicked down a notch. According to the US Conference Board, consumer confidence from November to December shot upward by considerable margins. According to the organization, November’s consumer confidence index reading of 107.1 was dwarfed by December’s reading of 113.7. Being that economists were not anticipating the index advancing past 108, it is easy to see why the data ended up having a negative impact on precious metals.

Lynn Franco, a director at the Conference Board, commented on December’s improved index reading by saying, “A more favorable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence. And while the majority of consumers were surveyed before the presidential election, it appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome. With the holiday season upon us, a more confident consumer should be welcome news for retailers.”

It is good that Franco made these statements, because if she hadn’t investors and market watchers alike might have been quick to attribute the spike in consumer confidence to Donald Trump’s election as the next President of the United States. Though his election likely did not hurt consumer confidence, it was not a hugely significant factor in today’s upbeat data.

Crude Oil Prices Provide Some Support

A major part of the reason behind why precious metals did not get killed by the consumer confidence report was the upward movement on the part of crude oil. Ever since OPEC and non-OPEC nations agreed to a reduction of their daily production of crude oil, the commodity has been doing increasingly better and is looking like it will kick off the New Year continuing along this upward path.

In news from Europe, it was reported on Tuesday that the oldest bank in Italy, Monte dei Paschi di Siena, is in need to a bailout which totals more than $9 billion. Without the bailout, a very real fear is that the bank will be forced to close its doors. As you might have guessed, liquidity problems are the biggest contributing factor to the bank’s well-documented struggles. Though the European Central Bank made the announcement of the bank’s monetary need, the ECB did not make any comment with regard to whether or not they were going to help finance the needed bailout.

This will be an interesting story to follow as we head into the New Year, especially when you consider the developments that have taken place in Italy, with their prime minister, Matteo Renzi, resigning following a nationwide referendum vote.

Wrap-Up

Tuesday offered up a bit more data than what you might have expected from the week falling between the Christmas and New Year’s holidays, but that is something that is likely to not continue as we head further into this week. Once again, as the week carries on we expect that trading activity will steadily decrease as people turn their attention to New Year’s celebrations. For gold and silver, this could be a good thing so long as crude oil prices remain on the rise, however there is no surefire way of telling whether this will remain the case or not.

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.