Gold Spot Price Open: $1,287
Gold Spot Price Close: $1,267
Change in Gold Spot Price: -$20
Silver Spot Price Open: $17.49
Silver Spot Price Close: $17.07
Change in Silver Spot Price: -$0.42
After finishing last week positively, precious metals opened up on Monday conceding some of the gains made on Friday. When all was said and done, gold was down by close to 20 dollars while silver lost in upwards of 45 cents. Platinum and palladium finished down on the day as well, with platinum moving down by more than 30 dollars while palladium lost close to 25 dollars.
Stocks, Dollar Limit Metals’ Upside
Despite the weak, disappointing employment figures that were dealt towards the end of last week, stocks in the US as well as the US Dollar opened up this new week positively. As has been the case recently, the movement of precious metals continues to be dictated by the performance of the greenback.
What was surprising today was the fact that, after such weak data on Friday and through most of last week, gold and silver were not able to sustain gains or even build upon them. For much of this year we have seen this same series of event play out time and time again. Every time gold and silver make gains thanks to weak economic data or a surge in safe-haven demand the gains that are made are often whittled away only days later. As such, there has been a range established for gold which is somewhere between $1,050 and $1,300/ounce. The $1,300 mark has consistently been the ceiling of this range and every time gold has eclipsed that mark it quickly moves back downward.
Analyst Joni Teves from UBS commented on gold’s inability to move higher than this ceiling by saying, “Positioning has been stubbornly elevated so far this year, and as a result we hold the view that the market is going to continue consolidating within the range that has been established. The bounce in the dollar has also contributed to the pullback, and this period is seasonally slow for gold.”
As was stated above, this time of year is typically slow and typically not great for precious metals. We are seeing that happen currently and, as the Spring turns to Summer, this will likely continue to be the case. Still, with the general consensus being that June interest rate hikes are now off the table it really does seem like metals are in a position to move higher. Up to this point, however, such has not proven to be the case.
Oil Gains Thanks to Reduced Canadian Output
For the last week or more, a massive wildfire has been raging through the northern parts of Canada’s Alberta province. Fueled by endless woodlands and higher than usual winds, the fire has been incredibly difficult to fight via conventional means. Now, officials are saying that only the right mix of natural factors will be enough to aid the extinguishing of the fire.
In addition to the lives of everyday people, the raging fire has vastly altered one of Alberta’s primary industries—crude oil refining and extracting. Transporting crude oil, whether by train, truck, or pipeline has been drastically altered since last week. We are now seeing more than 1 million fewer barrels of oil being produced in Alberta daily. This production cut of sorts has prompted the spot value of crude oil to make gains to start out the week. Unfortunately, and as seen by looking at precious metals’ start to the week, gains on the part of crude oil are not translating into gains for gold and silver. It will be interesting to see if this changes going forward, but this is exactly how it has played out so far.
Wrap-Up
The beginning of the week was quiet, but for gold and silver most of the progress made on Friday was done away with upon the opening of markets on Monday. It will be interesting to see what happens throughout the duration of the week, especially as investors come to terms with the fact that further rate hikes are more than likely not going to occur in June.
A story that just broke this morning was the fact that Japan’s finance minister discussed the real possibility that there may be some intervention on the part of the Bank of Japan in order to control the Yen. What this most likely means is that we may see the Yen’s value further decreased in the coming weeks and months.
