Gold Spot Price Open: $1,248
Gold Spot Price Close: $1,260
Change in Gold Spot Price: +$12
Silver Spot Price Open: $15.50
Silver Spot Price Close: $15.97
Change in Silver Spot Price: +$0.47
Precious metals made nice gains to open up the week, thanks to a rate hike outlook that has grown increasingly weak in recent days. Building off the end of last week, gold managed to gain more than ten dollars while silver edged upward by nearly 50 cents. Platinum and palladium both also gained on the day, with platinum moving upward by more than twenty dollars while palladium picked up a few dollars more than five.
Rate Outlook Keeps Risk-Aversion Strong
Last Friday, the president of New York’s Federal Reserve made it clear that he, like Fed Chair Janet Yellen, is in absolutely no rush to push interest rates higher in the immediate future. The Fed last hiked interest rates in December, and at the time it was widely believed that we would see incremental hikes throughout the rest of the year. Now 4 months later and we have not seen interest rates move any further upward. There are many reasons for this, but the two that override all the others are slow growth on the part of many major economies and the belief that inflation in the United States will miss the Fed’s target by the time this year comes to an end. It must be said, however, that there are some members of the Federal Reserve who believe that inflation levels will rise to meet expectations by year’s end.
So long as it is widely believed that interest rates are going to remain put for some time, risk-aversion will abound. If investors are actively trying to avoid risk this is almost always good for precious metals. We are now looking at a few consecutive days’ worth of gains on the part of gold and silver and it will be interesting to see if this pattern will continue over the course of the next 4 days of trading.
Dollar Loses on Light Data Day
There was not all that much economic data dealt today, and as a result of the overriding belief that rates will be kept put for the time being the US Dollar is beginning to suffer. Today, the USD Index moved downward considerably, and this only worked to boost the spot values of gold and silver.
Adding yet one more facet to the rate hike discussion is the fact that President Obama is set to meet this week with Federal Reserve chair Janet Yellen to discuss hot-topic issues relating to the US economy. Most people are under the assumption that the discussion between Yellen and Obama will mainly center on what the future holds for interest rates, though overall economic growth prospects will likely also be discussed.
In addition to discussing economic growth topics, Obama is said to be meeting with Yellen to also go over potential Wall Street reforms. There were no specifics mentioned, but hopefully by the end of the day tomorrow we will hear more about what exactly was discussed between the POTUS and the Fed Chair.
Wrap-Up
All in all, Monday was a rather slow day as far as economic data was concerned, but we did see the US Dollar Index suffer at the hand of increasingly bleak rate hike outlooks. As the week progresses, we can expect that more Q1 economic data will stream in both from the US and elsewhere around the world. Other than that, the big piece of data investors will have their eyes on will be the weekly jobless claims report, which isn’t due out until closer to the end of the week. For now, investors can be satisfied that both gold and silver are beginning to trend upward again after a few weeks of fairly consistent losses.
