Gold Spot Price Open: $1,118
Gold Spot Price Close: $1,131
Change in Gold Spot Price: +$13
Silver Spot Price Open: $14.32
Silver Spot Price Close: $14.43
Change in Silver Spot Price: +$0.11
Precious metals continued their upbeat trajectory on Monday as some weaker Chinese data was released during pre-market hours. When all was said and done, gold gained more than ten dollars while silver concluded the day having gained more than ten cents. Platinum and palladium opened up the week positively, but by day’s end were left more or less unchanged.
Weak PMI Drives Spot Gold Upward
Worries regarding overall global growth and the possibility of more easy money in Europe and Asia were two factors that helped spot gold eclipse a 3-month high shortly after markets opened on Monday. According to China, manufacturing production fell to a point not seen since the middle of 2012. Production in China is continuing to slump and this only works to further derail the beleaguered oil market. As China is one of the biggest manufacturing countries in the world, the fact that their manufacturing sector is very visibly slowing down means that Chinese demand for crude oil and crude oil-related products is going to continue to suffer.
The uncertainty being created by China and other slowing global economies is something that has really come to the aid of gold and silver in recent weeks. Just when we thought spot values were going to approach new lows, this consistent batch of poor manufacturing data came in to save the day.
For Europe, the story is none too different than what it is for China. Right now, a decreasing number of factory orders are being placed which means that large scale production facilities are only working at partial capacity. For oil, this is yet one more drag that will continue to bring spot values down with it. For gold and silver, the existence of safe-haven demand will help spot values maintain their current heading and may even drive them further upward.
US Receives Poor Manufacturing Data Too
Manufacturing wasn’t poor only across Europe and Asia, as some weaker data was reported out of the United States today as well. According to the Institute for Supply Management’s PMI reading, the manufacturing sector of the US economy ticked just slightly upward in January as compared to December. If you can remember, December’s PMI reading came in at an even 48%. January’s was up by two tenths of a point despite it being widely expected that the rise would be of no less than .5.
For many, this data was not at all surprising seeing as the rest of the world is also struggling from a manufacturing standpoint. The reason for the smaller than expected PMI rise from December to January was due to the fact that some regions reported an uptick in factory orders at the same time as an almost equal number of regions reported a downturn. Officially, 7 of eighteen regions reported that orders were fewer in January than December, while 8 reported that they increased over the same timeframe. Naturally the data being a mixed bag of sorts always meant that the PMI reading was going to remain relatively even.
Wrap-Up
As we head further into this first full week of Fenruary trading, it will be interesting to see if gold and silver spot values can continue to make gains. For now, both metals are sitting at or near multi-month highs, and so long as uncertainty abounds as it has for the past few weeks, I do not see why spot values cannot continue to climb. With that being said, however, a looming OPEC meeting may do well to push the spot value of crude oil upward which, at this point, may not be the best thing for gold and silver. It is really difficult to read at this point in time, so we will just have to sit back and see how the rest of this week pans out.
