Gold Spot Price Open: $1,110
Gold Spot Price Close: $1,109
Change in Gold Spot Price: -$1
Silver Spot Price Open: $14.69
Silver Spot Price Close: $14.46
Change in Silver Spot Price: -$0.23
Precious metals opened up the week moving downward slightly as the market’s full attention slowly shifts to the upcoming FOMC meeting that is expected to kick off this week. When all was said and done, gold lost about a single dollar while silver finished down by nearly 25 cents. Platinum and palladium also moved downward, with platinum losing more than 15 dollars while palladium stepped back by just more than 5.
Uneventful Start to the Week As Speculation Abounds
Though this was always the expectation, investors the world over began this week by closely analyzing what exactly they think the outcome of the Fed’s meeting will be. From a 30,000-foot view, it seems as though the marketplace is slowly but surely coming to terms with the likelihood that the Fed may hold off on hiking interest rates. Prior to the last 4 or so weeks, it was generally agreed that the Fed was going to raise US interest rates for the first time in nearly a decade, but some recent developments have taken the wind out of that belief’s sails. Now, thanks to uncertainty regarding China and other global economies, there is a growing belief that the Fed may hold off another month or two before hiking rates.
The Dollar is suffering thanks to this altered view on the timing of interest rate hikes, as some investors think we will have to wait until December before they take place. Speaking to the current state of uncertainty plaguing the global marketplace was Neil Mellor of Bank of New York, who said, “If there is an uncertain world, if China is slowing aggressively, then you have a situation where the Fed may well reconsider raising interest rates.” Now that we have finally reached this ever-so-pivotal week, it will be truly interesting to see where things go from here.
Expect Slow Next Few Days
As if today’s action, or lack thereof, was not enough of a giveaway, you can expect that the early parts of this week will remain slow and subdued. Though most of the market has grown convinced that interest rates will remain put, most are going to hold their positions until the Fed concludes their meeting later this week. Once Janet Yellen and her colleagues get a chance to speak, then we may see a bustle of activity. Until then, however, it is looking like the market is lying in wait and speculating.
Some more weak Chinese data was made public over the weekend, but this did not phase the market as very few people are expecting anything other than poor data to emanate from China at this point. A conference held over the weekend saw key Chinese officials make it clear that the Chinese economy is in need of innovation if it wants to continue operating at a high level. The old way of doing things is quickly proving to be ineffective, and change is needed. What type of change they are alluding to, however, remains as much of a mystery now as it was a week ago. We know that China is in need of something to jump-start their ailing economy, though most attempts of doing so have failed thus far.
Wrap-Up
At risk of sounding like a broken record, it is very clear that the rest of the week will see the market focus very closely on the Fed’s meeting and anything related to it. I expect most other pieces of economic data to be mostly ignored by the marketplace, barring any major, unexpected figures. This is a week that has been circled on many investors’ calendars for months now, and it will be interesting to see how things play out.
