Gold Spot Price Open: $1,247
Gold Spot Price Close: $1,267
Change in Gold Spot Price: +$20
Silver Spot Price Open: $16.45
Silver Spot Price Close: $17.00
Change in Silver Spot Price: +$0.55
Gold edged in on a two-week high on Wednesday as investors become increasingly convinced that interest rates will not be hiked at the upcoming FOMC meeting. When all was said and done, gold gained more than 15 dollars while silver gained more than 60 cents. Platinum and palladium picked up roughly 10 dollars apiece on the day.
Chances for June Rate Hike Decrease Significantly
A major theme that began to take shape towards the end of last week was the fact that interest rates in the US are not likely to be risen anytime soon. While only a week ago it was generally agreed that rates would be hiked come the June 14th-15th meeting of the Federal Open Market Committee, that much has changed thanks to a May non-farms payrolls report that showed fewer than 40,000 new jobs created. Considering the tone of employment data was always going to heavily influence the likelihood of a rate hike, it is easy to see why last week’s poor data has had the impact that it has.
Now, we are actively seeing investors price in the likelihood that rates will not be hiked. Though the Fed has remained generally upbeat about the fact that the US economy is still performing well, the one crucial piece of data does little to support that stance. As a result, we are seeing the USD begin to take a downward turn, which is helping provide some support for precious metals. All in all, we are seeing both gold and silver begin to dramatically improve from the positions they were in only a week ago.
As we look forward to next week, it is highly likely that there will be continued speculation as to what the near-term future holds for interest rates in the United States. Next week sees the FOMC finally meet, however we are now not really expecting much to come as a result of the meeting.
European Markets Down on the Day
European stocks have been performing well recently, but today saw most markets succumb to a bit of profit-taking after recent gains. As you might have expected, European markets have been doing well directly due to Yellen’s relatively dovish stance regarding interest rate hikes as well as how investors the world over generally feel about their likelihood.
Also today, the World Bank released a diminished outlook for global economic growth thanks to a slow trek forward on the part of more developed economies. In January the World Bank projected that the global economy would grow by just shy of 3%, but now its projections are for growth of less than 2.5%. This is now a trend amongst major financial institutions, as the slow growth on the part of US and European economies is beginning to have real consequences.
Wrap-Up
Apart from gold and silver rallying in ways that we have not seen in a few weeks, Wednesday was mostly a lackluster day with very few new developments. Naturally, the marketplace continued to speculate with regard to the future of interest rates, but other than that there wasn’t much to talk about. The US Dollar is expected to continue moving downward as more and more investors come to terms with the fact that interest rates will not be touched come next Thursday.
