Gold Spot Price Open: $1,176
Gold Spot Price Close: $1,173
Change in Gold Spot Price: -$3
Silver Spot Price Open: $16.84
Silver Spot Price Close: $16.70
Change in Silver Spot Price: -$0.14
It’s a different day, but the story is much of the same for precious metals as losing ways continued. When all was said and done, gold ended up losing roughly 3 dollars while silver was once again down by more than 10 cents. Platinum and palladium finished the day mixed, but once again neither metal moved too far from where it began the day.
Metals Reeling Thanks to Economic Data, Interest Rate Expectations
Gold was once again flirting with 10-month lows for most of the day mostly thanks to strengthened expectations regarding interest rate hikes. With the positive economic data that has been released in recent days, and the expectation that US data will continue to be strong, there is simply not very much interest in precious metals. What’s more, the stronger Dollar is not helping precious metals either.
If you are wondering why metals are suffering at the hand of interest rate expectations, the reason for this is simple. Higher interest rates raise the opportunity cost of holding metals in lieu of interest-bearing assets and that does well to limit interest in metals. This has been the case for some time now, but with the expected interest rate announcement only a little more than a week or so away, reality is setting in and people are coming to terms with the fact that rates are, in fact, going to be raised. So long as the US economic data stream remains as upbeat as it has been, I do not foresee market conditions changing entirely too much.
ECB Meeting Eyed by Global Investors
After the Euro currency hit fresh, 3-week highs against the Dollar as a result of the Italian referendum result on Monday, it backed down on Tuesday. Despite this small trek backwards, the Euro is still holding its ground quite well as the eyes of the world shift to the European Central Bank, which is holding its monthly policy meeting this week. This week’s meeting, in particular, is so noteworthy because it is widely believed that the ECB will make a decision with regard to what the future holds for the ongoing monetary easing going on across the continent.
Right now, the uncertainty levels across Europe are at their highest points since just prior to June’s UK BRExit vote. Unsure of what the Italian Prime Minister’s resignation might mean for Italy and the rest of Europe, investors are wondering if the ECB will continue to feel comfortable about devaluing a currency that is already being threatened by the strength of the Dollar.
Thursday is the day we expect to hear more about the future of quantitative easing in Europe. It is widely believed that ECB president Mario Draghi will lay out detailed plans with regard to what the QE program will look like after March of 2017. Most are anticipating that QE will hang around until the onset of 2017’s summer, but that is something we will hope to know for certain by the end of the week.
Wrap-Up
For the next few days a lot of investor attention will be placed on everything happening across Europe. In addition to the progress—or lack thereof—of the Euro, we will be keeping an eye on European economic data and any talk regarding what Draghi might say come Thursday. For precious metals, there is not much out there to suggest that spot values will make any sort of recovery in the near future. We will continue to closely eye any and all US economic data that is dealt, but at this point it is going to take far more than a single poor piece of data to undo expectations that interest rates will be hiked before the New Year rolls around.
