Gold Spot Price Open: $1,325
Gold Spot Price Close: $1,324
Change in Gold Spot Price: -$1
Silver Spot Price Open: $18.61
Silver Spot Price Close: $18.65
Change in Silver Spot Price: +$0.04
Precious metals were given a boost on Friday, but were also delivered some news that threatened to push spot values even lower. When the dust finally settled, however, gold managed to squeeze out gains of about 2 dollars while silver added roughly 5 cents. Platinum and palladium didn’t do much moving at all on the day, and neither metal finished too far from where it opened.
US Q2 Growth Revised Downward
According to the Commerce Department, Q2 growth for the United States was not quite as good as originally reported. After finding out that many retailers ridded themselves of unsold goods, thus offsetting the rise in consumer spending, it appears as though things are not always how they seem. As a result, the original 1.2% year on year growth that was reported was revised downward to 1.1%. The numerical revision is not the biggest deal, but what the downwardly revised data does is force investors to think twice about the strength of the economy. Further, this puts a small dent in the hopes that interest rates will be risen anytime soon. Though, to be fair, any piece of data that is anything short of amazing will more than likely put a dent in interest rate hike outlooks.
Perhaps denting the overall outlook on the US economy even further was the Gross Domestic Income, or GDI, from the 2nd quarter of this year. According to the Commerce Department, Q2 GDI growth came in at just .2%, which is a far cry from the .8% rise we saw in Q1. As opposed to GDP, which measures how much businesses spend in a given period, GDI measures how much is brought in, or earned.
Basically, today’s data more or less solidifies the belief held by many members of the FOMC, and that belief is that more consistent economic data is needed before rates can be raised. To make it even clearer, today’s data mostly falls into the camp of policy doves, who would rather see rates kept at their current level for the time being.
Yellen Alludes to Possible Rate Hike
In many ways contradicting the aforementioned economic data was Janet Yellen, who spoke in Jackson Hole, Wyoming on Friday. According to Yellen, economic data and the overall state of the economy have reached a point where interest rates are, in fact, justified.
In her remarks, Yellen said, “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”
There were many other remarks made, but Yellen made it very clear that it would be a mistake to count out further rate hikes this year. As was mentioned yesterday, there is not one single upcoming month where the likelihood for a rate hike is more than 50%, but that very well might change as a result of her remarks today. Of course, this will all depend upon how the US economy fares in the near-term. If we continue to see downwardly revised data like we saw today, the chances for a rate hike are going to fall.
Wrap-Up
Gold and silver had an interesting Friday, but the week as a whole was more of a wash than anything else. Spot values continued to tumble and with few fresh pieces of economic data to digest, there is not much to suggest that we will see gold nor silver fight back in the coming days. This is especially true should investors become increasingly convinced that a rate hike is going to come in the near future. Even though market conditions are somewhat calm at the present moment in time, you can expect that that will change after next week as more investors, government officials, and other big-name players return from summer vacations.
