Gold Spot Price Open: $1,120
Gold Spot Price Close: $1,140
Change in Gold Spot Price: +$20
Silver Spot Price Open: $15.11
Silver Spot Price Close: $15.25
Change in Silver Spot Price: +$0.14
Precious metals finished the week nicely thanks to the Fed’s not raising interest rates. When all was said and done, gold managed to add twenty dollars on Friday while silver nearly picked up another 15 cents. Platinum and palladium did not do much moving on the day, but did have a nice end of this week.
Precious Metals Bounce Back After Fed
As most are already aware, the Federal Reserve of the United States opted to keep interest rates at their current levels for the time being. With that being said, comments made by members of the Fed indicated that interest rates will be risen by the end of the year. Gold and silver spot values responded positively to the Fed’s not raising interest rates. This is not such a surprising occurrence seeing as raised rates would make investments in safe-haven gold and silver unappealing.
We were dealt some other economic data on Thursday, namely the weekly jobless claims report from the United States. While last week claims for unemployment benefits falling by 11,000 was a positive thing, the even better piece of information was the fact that the four-week moving average of jobless claims fell as well. The four-week moving average is seen as a more accurate gauge of the strength of the employment sector of the US economy. Employment is a major determinant of when interest rates might be raised, so it is encouraging to see these figures continue to come back positively.
Dollar Does Better In Wake of Fed
Despite beginning the day hovering around a 3-week low, the US Dollar bounced back on Friday after the Fed’s inaction on Thursday. As if it weren’t already obvious, the Fed has dominated the headlines this week and will likely be difficult to avoid talking about so long as rates remain at current levels. The course of the Dollar almost wholly depends on how investors feel about the potential for raised rates. Being that higher interest rates will result in a stronger US Dollar, the possibility of a rate hike this year hanging around lends itself to a strong greenback; even despite the currency’s recent weakness.
Rabobank currency strategist Jane Foley commented on the Dollar’s situation by saying, “Yellen made clear that as things stand, there’s a very strong chance that they will hike interest rates later this year and therefore you have to question how far dollar weakness can extend.”
On the other hand, with so much going on across the global market (oil supply glut, China’s problems, and slowing emerging market growth) there are some people who doubt that rates will be raised within 2015. When it comes down to it, no one really knows what is going to happen to interest rates seeing as no one really knows what is going to happen across the global market. While the US economy is performing well, we are quickly finding out that it takes much more than that for the Fed to be confident the US economy can withstand higher rates.
Wrap-Up
This week was a roller-coaster ride for precious metals, but when all was said and done gold and silver came out on top. Silver is now trading above $15/ounce, so it will be interesting to see if the metal can open up next week hovering around the same mark. Looking ahead to the week to come, you know as well as I do that it will likely be dominated by focus on the US economy, China, and plenty of interest rate speculation.
