Gold Spot Price Open: $1,267
Gold Spot Price Close: $1,269
Change in Gold Spot Price: +$2
Silver Spot Price Open: $17.10
Silver Spot Price Close: $17.07
Change in Silver Spot Price: -$0.03
Gold and silver did not continue losing value too dramatically on Tuesday, but the fact of the matter is that neither metal did much to gain back what was lost on Monday either. When all was said and done, gold added a few dollars while silver managed to lose a few cents. Platinum and palladium both finished the day in the green, but only by a few dollars.
Crude Oil Levels Off
To begin the week, we saw crude oil making nice strides forward thanks to a production cut in Canada. Unlike in the Middle East where voluntary production cuts are being discussed, Canada was forced to reduce their daily output by more than 1 million barrels due to a massive wildfire burning in the Alberta province. As you might have expected, news of the production cut spread quickly and revamped buying interest in crude oil. Only a day later, however, there are reports that firefighters have made progress in fighting the blaze.
Still, the fire continues to burn and is bearing down on community after community. All told, more than ten producers of crude oil and a handful of pipeline operators are still operating at reduced capacity. We will continue to keep a close eye on the Alberta wildfire as it will continue to directly influence the spot value of crude oil.
Japan on the Verge of Devaluing Yen Further
Yesterday, one of the biggest headlines came about thanks to Japan’s finance minister alluding that further currency intervention was not out of the cards for the struggling economy. Instantaneously, this news resulted in the Yen being pushed downward, so far so that the currency is now sitting at a 2.5 week low against the greenback.
Taro Aso, the nation’s finance minister, rattled a few cages by making it very clear that the island nation’s economy is nowhere near where it should be. As such, it follows that devaluing the Yen even more than they already have may continue to aid economic recovery and trade with foreign nations. Even though the price action of the Yen today suggests that currency intervention is imminent, there are plenty of people out there that feel as though there is still a lot that needs to happen before any real moves to devalue the currency are made.
First and foremost, Japan and its policymakers are taking note of a G7 meeting that will be hosted by Japan towards the end of May. The G7, as a group, has been vocally critical of any country that attempts to manipulate the value of its currency, and Japan would like to avoid any further accusations along this line. For this reason alone, many investors do not see the Bank of Japan doing anything to alter monetary policy until June at the very earliest.
The Yen’s continued weakness has helped push the USD higher in recent months. While this may seem like a good thing, the stronger Dollar in the face of a weaker global economy is something that is slowly but surely preventing sustained growth on the part of the US economy. Simply put, a stronger US Dollar means that US goods are more expensive to buy. Because of rising prices on exported goods from the United States, other countries who may be particularly cash-strapped will omit US goods for cheaper goods produced by other countries. The end result of this is stunted growth on the part of the US economy.
Wrap-Up
All in all Tuesday proved to be yet another slow day across the global economy. There wasn’t much in the way of fresh, fundamental news, but instead we saw investors focus on the two main headlines from Monday. As the week wears on it is highly likely that the Alberta wildfire will continually be called into focus simply because of what it means for the global oil supply and, thus, spot values.
