Gold Spot Price Open: $1,336
Gold Spot Price Close: $1,316
Change in Gold Spot Price: -$20
Silver Spot Price Open: $20.01
Silver Spot Price Close: $19.25
Change in Silver Spot Price: -$0.76
Precious metals extended their poor run of form on Wednesday as stronger equities and a stronger greenback sent spot values downward. When all was said and done, gold ended up losing in upwards of 20 dollars while silver retreated by more than 75 cents. Platinum and palladium both also lost on the day, but platinum was the bigger loser of the two having declined by more than 20 dollars on the day.
Dollar Supported by Stronger US Data
Though the data was officially dealt on Tuesday, a report on housing starts in June did not really have much of an impact until Wednesday in most parts of the world. As a refresher, it was reported that housing starts during the month of June increased by 4.8%. Though this is about 2% worse than the same month a year ago, it is a strong number nonetheless.
Riding the back of this good news was the US Dollar, whose index was hovering right around a 4-month high the second markets in the US opened for the day. The USD Index measures the greenback’s performance against that of a few rival currencies, and is the best way to gauge the USD’s overall strength.
What all this positive movement on the part of US economic data, the Dollar, and equities is doing is bolstering the belief that perhaps rate hikes are going to happen after all. We have gone back and forth on the matter over the last few months, but in light of recent events it seems as though rate hike expectations are creeping back onto the scene. According to currency strategist Thu Lan Nguyen, of Commerzbank, “The dollar is now being supported by rising U.S. rate expectations. The likelihood of a Fed rate hike before the end of the year that is being priced in by the markets has almost returned to the levels seen before the EU referendum.”
With the FOMC meeting mere days away, it will be interesting to see what kind of statements are made both before and after. What’s more, it will be interesting to see if changes are made to rates this time around. While most would label such a move as highly unlikely, the Fed loves being unpredictable with how they handle monetary policy; or so it appears.
Stocks Higher, ECB Meeting Called Into Focus
It wasn’t just US economic data that was pressuring metals, as equity markets also ventured forward and did enough to ensure the day would be one of losses. Naturally, global equities are jumping forward due to the upbeat view most people are taking towards the US economy, but more factors than that alone are working to help push stocks higher.
With the European Central Bank scheduled to meet tomorrow, investors are curious as to what will come as a result. While no major changes to policy are expected at the present moment in time, investors and market analysts alike are anticipating that president Mario Draghi will announce the framework for future plans to stimulate the European economy. Long story short, European economic stimulus does not seem to be going anywhere anytime soon. This is an underlying bullish factor for metals, but has thus far had little impact seeing as it has not been officially discussed nor announced.
Wrap-Up
Looking ahead to tomorrow, yet another batch of weekly jobless claims is due out. In addition to this, investors will be keeping a close eye on the ECB meeting and any commentary stemming from it. Precious metals have had a tough go of things this week and barring any major changes to the tone of economic data, particularly that which comes from the US, there is not much out there to suggest that these losses will be reverted.
