Gold Spot Price Open: $1,323
Gold Spot Price Close: $1,344
Change in Gold Spot Price: +$21
Silver Spot Price Open: $18.76
Silver Spot Price Close: $19.75
Change in Silver Spot Price: +$0.99
Gold and silver both made nice gains on Friday to close out yet another upbeat week. When all was said and done, gold gained more than 20 dollars while silver gained in upwards of a whole dollar. Platinum and palladium also strode forward on the day, with platinum gaining more than 30 dollars while palladium posted a much more modest 6 dollar gain.
Dollar Down vs. Euro on Dovish Fed
Though the Dollar has been performing half-decently recently mostly due to the fallout from BRExit, today such was not the case. The Dollar ended up conceding value against the Euro thanks to the increasing likelihood that we may not see another rate hike until sometime next year. In fact, some people are even doubting if anything will happen next year to push rates higher. The fact of the matter is that the global marketplace is currently in shambles and investors, policymakers, and market experts are all trying to piece things together, albeit unsuccessfully.
Douglas Borthwick, of Chapdelaine Foreign Exchange, commented on the dollar’s renewed weakness by saying, “The dollar’s weak not because rate hikes have dimmed, but rather because the Fed has turned off the lights and walked out of the room.” In essence, the Federal Reserve seems to have shut off the possibility of any further 2016 rate hikes altogether. While this may not be such great news for the greenback, it is excellent news for precious metals. Silver, which posted its best quarterly gain in 4 years during 2016’s 2nd quarter, has gained nearly 10% in the last week alone and is quickly edging in on the $20/ounce threshold. This is entirely unexpected, but welcomed by precious metals bulls who really have a lot of control at the present moment.
Of course, BRExit’s fallout has ramifications that extend far beyond the USD. In the UK, it is incredibly difficult to make sense of the political situation we are currently witnessing. With people stepping down from positions left and right, safe-haven assets are attractive as they have been at any point in the past year or more. It will be interesting to see what direction things head in in the next few weeks as there are talks of Scotland and Northern Ireland both making moves to abandon the UK in an effort to remain part of the EU. Though it is highly unlikely that such a scenario would work out so simplistically, it is not being taken off the table as a possibility.
Making things even more confusing, perhaps, is the fact that the unemployment rate across the Eurozone is nearing multi-year lows. In fact, a report released today showed that Eurozone unemployment is at its lowest levels since July of 2011. But, as has been the case for a few years now, we are seeing Germany lead the way while economies like that of France and Spain are continuing to lag behind. We have been harping on this for a long time now, but in order to see any semblance of sustained growth across Europe we are going to first need to see a balancing of growth. What we mean by this is that all economies have to pull their own weight instead of relying on giants like Germany to pick up the slack.
Wrap-Up
Looking ahead to next week, it is highly likely that things will get off to a slow start thanks, in part, to the 4th of July holiday being celebrated in the United States. With markets in the US closed on Monday, expect a flurry of activity upon markets’ opening on Tuesday as plenty of month and quarter end economic data is expected to be dealt. It will also be intriguing to see just how far precious metals can climb after this week’s rally.
