Gold Spot Price Open: $1,278
Gold Spot Price Close: $1,261
Change in Gold Spot Price: -$17
Silver Spot Price Open: $17.27
Silver Spot Price Close: $16.88
Change in Silver Spot Price: -$0.39
Precious metals opened up the day on Wednesday by posting small losses and really were never able to turn them around. When all was said and done, gold dropped close to 17 dollars while silver lost more than 35 cents. Platinum and palladium were both down as well, but while palladium’s losses were only little more than 10 dollars, platinum lost close to 30 dollars
Stronger Dollar Wears on Gold and Silver
After Tuesday brought with it 2 relatively large pieces of US economic data, both of which beat expectations, it should come as no surprise that the US Dollar is performing well. To recap, Tuesday’s data showed that consumer prices rose in April by more than expected and that industrial production in April was the best we have seen from a single month in almost a full decade. What’s more, this is the first time in more than 3 months where industrial production grew rather than shrank. After what has been a fairly consistent run of poor data points from the US economy, yesterday’s data was well-received by many investors, but especially those who want to see interest rates rise again in the near future.
Despite the upbeat data and the stronger Dollar, precious metals investors should be encouraged by the fact that spot values are not moving too drastically lower. It seems as though the general uncertainty regarding US monetary policy, China’s economy, and crude oil prices are all lending support to gold and silver; even if that support is being recorded as mitigated losses rather than out and out gains. Thursday and the weekly jobless claims report that comes with it will prove pivotal in determining whether or not gold and silver make weekly gains or post weekly losses yet again.
FOMC Minutes Analyzed and Digested
In recent months we have heard the Fed constantly reiterate their belief that the US economy is indeed strengthening and on pace for moderate growth by year’s end. Even with downgrades to growth expectations, most members of the US Federal Reserve tout the US economy as being resilient in the face of mounting pressures from other economies. More recently, we have reached a point where the comments being made by the Fed are not necessarily matching up with the US economic data being dealt. Over the last few months, US economic data has been anything but upbeat, and because of this investors are putting a lot of weight on the minutes from the Fed’s most recent meeting, which were released today.
The Fed’s minutes sent a shockwave across the global marketplace as there now seems to be a much higher likelihood that rates will be raised in the near future. In fact, the minutes showed that most voting members of the Fed would be in favor of a June rate hike should key economic data points prove that the US economy is strong enough to withstand another hike. In the lead-up to the minutes’ release, there weren’t very many people who even thought a June rate hike would come to be, but now you will be hard-pressed to find a single investor who is counting a June rate hike out.
Wrap-Up
All in all, Wednesday was a typically slow day with the exception of the release of the FOMC’s minutes from their most recent meeting. The FOMC minutes are a good piece of information for investors to chew on, but as far as economic data was concerned Wednesday was fairly light. As we look ahead to tomorrow, it will be interesting to see what kind of numbers the weekly jobless claims data has to report. After last week’s shocking tick upward, investors will be anxiously waiting to see if things normalize as so many people suggested they would.
