Gold Spot Price Open: $1,190
Gold Spot Price Close: $1,184
Change in Gold Spot Price: -$6
Silver Spot Price Open: $16.51
Silver Spot Price Close: $16.35
Change in Silver Spot Price: -$0.16
Precious metals conceded some value on Monday thanks to a stronger US Dollar ahead of some important Greek, EU/IMF talks this week. When all was said and done, gold lost about 6 dollars while silver declined by more than 15 cents. Platinum and palladium also declined on the day, by about 15 dollars apiece.
USD Index Ticks Up Ahead of Big Greek Debt Payment
The USD Index made significant gains against the Euro currency and a bunch of other currencies on Monday after last week’s mixed employment data. Today, the greenback improved thanks to worries stemming from a Greek debt payment that is due to be made on Tuesday. The payment, which totals 750 million Euros, has a deadline of tomorrow, and many think that this is a deadline that will not be reached. If you can remember, the overriding belief is that Greece defaulting on even one loan payment will be enough for the Mediterranean nation to be ushered out of the European Union.
Also helping the Dollar is the fact that, for the past 3-4 weeks, it has been on a mostly downward trend. We are seeing the Dollar correct itself higher, and the situation involving Greece is only helping that move forward. It will be interesting to see what the Dollar does through the duration of the week.
China’s Central Bank Slashes Rates
When things wrapped up last week, we were talking about the possibility of China’s central bank making further alterations to monetary policy. That much took place on Sunday in the form of the latest interest rate cut for China. Officially, the overriding interest rate in China dropped from 5.35% to 5.10%. This move was made in an effort to encourage spending on the part of individuals and businesses.
You see, China’s economy has so far not lived up to expectations this year and has been struggling for the better part of the past two. I expect that we will see China’s central bank further manipulate monetary policy in order to spur economic growth. Putting China’s economic struggles into perspective is the fact that, in April, the country’s trade surplus was just above $34 billion. Seeing as expectations were for a surplus closer to $40 billion, it is easy to see why this piece of data is extremely disappointing. Both exports and imports came back much worse than expectations for April as well.
Wrap-Up
To be completely truthful, this was a relatively slow start to the trading week. A lot of the data we received was from China and was released on Sunday, so it didn’t have that much of an impact on the marketplace. Looking ahead to the rest of this week, I can guarantee that the immediate attention of investors everywhere will shift to the loan payment expected to be made by Greece tomorrow. If that payment is missed, you can expect that the marketplace will be abuzz with activity and speculation regarding Greece’s future as a member of the EU.
In addition to this, it will be intriguing to see how the US Dollar performs as the week moves forward. Despite today’s gains, the Dollar hasn’t done well in recent weeks and this is something investors are going to want to pay attention to.
