Gold Spot Price Open: $1,352
Gold Spot Price Close: $1,350
Change in Gold Spot Price: -$2
Silver Spot Price Open: $19.93
Silver Spot Price Close: $19.62
Change in Silver Spot Price: -$0.31
Gold spent the first part of the day on Wednesday losing value, but were able to fight back after the FOMC minutes were released. When all was said and done, gold ended the day session with marginal losses while silver ended up losing as well—by about 31 cents. Platinum and palladium finished the day mixed, with neither metal moving too far from where it began the day.
FOMC Minutes Mulled by Investors
Though it may come as a bit of a surprise, gold and silver were able to end the day near session highs after a batch of FOMC minutes that suggested the opposite might be the case. The minutes showed that a surprising number of FOMC members would have liked to see interest rates hiked at some point during this summer. The reasoning behind this is due to the fact that these members feel as though economic threats, such as BRExit and poor US employment data, have subsided and proven to not be as big of a deal as originally thought.
Still, the winning opinion, and reason interest rates have been kept in their .25%-.50% range, was that more time is needed to fully analyze the strength of the economy here at home as well as other global economic and financial factors. The big takeaway from the minutes was a small quote that said “near-term risks to the economic outlook have diminished.” Investors interpreted this as meaning that the door might have been opened a bit to one or potentially even two more rate hikes before year’s end. Up until today, you would have been hard-pressed to find many people who thought that another rate hike was likely to happen before 2016 came to an end.
Royce Mendes, of CIBC World Markets, had an interesting analysis of what today’s minutes really meant for investors around the world. He said, “while the minutes appear more hawkish than the official statement, there have been a selection of disappointing data releases since the time of the meeting…as a result, there has been evidence for both sides to point to, which has resulted in recent speeches by FOMC members containing a wide range of views of the appropriate course of policy.”
Though there was a bit of reaction today, not much has changed as it relates to the outlook regarding rate hikes and the potential that we will see further hikes before the year is over. There may be some FOMC members that prefer rates be hiked sooner rather than later, but until the overriding thought of the entire FOMC is shifted, rates will more than likely be kept steady.
Apart from the FOMC minutes, there really wasn’t much else happening across the global marketplace; at least not anything explicitly noteworthy. The US Dollar initially bounced back shortly after markets opened, however the split opinion of the FOMC ended up pushing the USD Index back down towards the end of the day. This is another factor that helped precious metals recover and finish the day off of session lows.
Wrap-Up
As you can plainly see, the top story of the day was the FOMC minutes, although no one was ever expecting to see anything else. Because the minutes were released somewhat late in the day, you can expect that the early parts of Thursday will be dominated by delayed reaction from investors in Europe and Asia. What this means for gold and silver is unclear, but I would not expect any major changes to spot values as a direct result of this. In fact, the lack of economic data in general has led most to believe that spot values are likely to remain mostly put through to the end of the week. Of course, this is never a guarantee.
