Gold Spot Price Open: $1,157
Gold Spot Price Close: $1,142
Change in Gold Spot Price: -$15
Silver Spot Price Open: $14.90
Silver Spot Price Close: $14.75
Change in Silver Spot Price: -$0.15
Precious metals did not do much moving on Tuesday, but what movement occurred was mostly on the negative side of things. When all was said and done, gold finished down by about 3 dollars while silver finished not too far from where it began the day. Platinum and palladium finished the day mixed, with platinum posting small gains while palladium lost in upwards of 15 dollars.
China Cuts Rates for Fifth Time Since November
In case you missed it, the first trading day of the week brought about a lot of unexpected turmoil thanks to a Chinese equities sell-off the likes of which we have not seen in nearly a decade. Now convinced that China is, in fact, in the midst of an economic slowdown which cannot be ignored, investors are not sure what the future might hold. In response to yesterday’s equities tumble as well as other recently poor bits of economic data, China’s central bank decided today to slash its primary lending rate for the fifth time since November of 2014. In addition, the central bank of China also lowered banks’ reserved requirement ratio, encouraging the banks to give out cash that will hopefully jumpstart a flailing economy.
For the first time in five days the US Dollar made nice strides forward, posting gains against the Swiss Franc, Euro, and Yen. This should not come as much of a surprise due to the fact that stocks in the US rebounded nicely on Tuesday after Monday’s tumultuous start. For gold and silver, the Dollar making gains is never a good sing. With that being said, however, there still remains a chance that currently unpredictable market conditions will make way for increased safe-haven demand; especially in light of such low spot values.
Interest Rate Hike Outlook Changing
As far as investors are concerned, it is growing increasingly less likely that interest rates will be cut at next month’s Federal Reserve meeting. Despite a poll taken on August 18th that showed nearly half of respondents confident that rates will be raised in September, more recent polling shows that about half of that number of people now feel as though we will see rate hikes in September.
In light of recent events in China, the market has taken a step back in order to reflect how a slowed down, struggling Chinese economy may affect their long-term trading outlook. For now, it seems as though the market is convinced that China’s economy taking a downturn will have a negative impact on the timing and extent of interest rates. For one, there are quite a few investors who have grown convinced that September will not see rates hiked. What’s more, for those that still anticipate an uptick on the part of interest rates next month, most are now convinced that rates will be risen much more modestly than originally anticipated. For now, however, we are left to speculate as the Fed has not really opened up in any amount of detail what, if anything, they plan on doing next month.
Wrap-Up
When all was said and done, Tuesday was more of a miss than anything else for gold and silver. After a few days of gains recently, both metals backed down by considerable margins today at the hand of a stronger US Dollar. Safe-haven demand for metals may persist so long as uncertain market conditions do, but I am not so confident that we will see spot values making all that many lasting strides forward.
As we head into the latter stages of the week, I imagine that the focus of the global marketplace will remain on China and all the economies/markets affected by turbulence there.
