Gold Spot Price Open: $1,299
Gold Spot Price Close: $1,295
Change in Gold Spot Price: -$4
Silver Spot Price Open: $19.68
Silver Spot Price Close: $19.48
Change in Silver Spot Price: -$0.20
Precious metals were seen conceding value for a majority of the day on Tuesday, pressured by stronger US equities and a stronger US Dollar. When all was said and done, gold declined by 4 dollars while silver lost about twenty cents or so. Platinum and palladium ended the day in the red and, like gold and silver, were trending downward from the second US markets opened.
US Stocks Jump Forward on Upbeat Earnings
For a second consecutive day, US equity markets are trending significantly higher and are only seeming to gain momentum. According to a report made public earlier this morning, housing starts in the United States reached their highest level in more than 8 months while the cost of living rose in July at a rate that was the slowest we have seen in nearly half a year.
A homebuilders index on the S&P 500 was reported as rallying by almost 2%, meaning that all 11 members of the index were on the up and up. What’s more, there were upbeat earnings reports from Home Depot, Dick’s Sporting Goods, and TJX Cos. The better than anticipated earnings made it clear that even despite a small slump in consumer spending, some businesses are finding ways to get product out the doors.
Russ Kosterisch, of BlackRock Inc., commented on today’s ‘flurry’ of economic activity positively when he was quoted as saying, “Housing starts were encouraging, and the housing market is one area the Fed has has been concerned about being somewhat fragile. With tame inflation data and the housing market benefiting from the drop in mortgage rates, it’s painting a pretty sanguine picture.” For precious metals, today’s data was not good news at all.
US Dollar Index Hitting New Highs
The US Dollar Index, which measures the strength of the USD against a basket of rival currencies, has risen continuously since the beginning of July. Just today, the greenback spiked so hard that it reached an 11-month high and was on its way to posting a new 12-month high. At this point, it has been almost a full year since we have seen the USD Index anywhere near where it is at currently.
One of the biggest factors giving the USD momentum is a weaker Euro currency as a result of looser monetary policy across the region. If the US does, in fact, move forward with the implementation of higher interest rates in the near to medium-term future, the US Dollar is liable to gain even more strength. It will be interesting to see what, if anything, Janet Yellen has to say when she addresses the crowd of central bankers at the Kansas City Federal Reserve meeting this Friday. In addition to her address, ECB president Mario Draghi is also expected to speak.
Palladium Hovering Just Below 13-Year Highs
Palladium lost more than ten dollars today, but on the whole it is sitting in a very strong position, just below 13-year highs. Fueled by increased car sales and emissions regulations in China, as well as supply worries from Russia, it is no wonder why the metal has been trending upward for a large portion of this summer. Only a few months ago, Palladium’s spot value was near an even $800. Now, the metal’s value is flirting with the $900 threshold and is only looking stronger with each passing day.
Palladium has been performing well lately, but according to Bart Melek of TD Securities “concern about supplies continue to drive the market, and it will continue to be the star performer of the year.” Mr. Melek is just one of many experts that thinks palladium is going to continue to trek forward throughout the remainder of this year and into 2015. After all, supply shortages from sanctions and mine strikes may not even actually be realized until a few months down the road.
Wrap-Up
Looking ahead to tomorrow, the market will be greeted with the release of the FOMC’s minutes from their latest meeting. As has been the case for the past 2 or 3 months, investors will be picking apart the minutes in search of any clue with regard to the future of interest rates in the United States. Additionally, the attention of the investing world will undoubtedly be drawn to any number of the ongoing geopolitical situations happening in the Middle East and Europe.
