Posted on January 15, 2016
Gold Spot Price Open: $1,080
Gold Spot Price Close: $1,091
Change in Gold Spot Price: +$11
Silver Spot Price Open: $13.90
Silver Spot Price Close: $13.99
Change in Silver Spot Price: +$0.09
Precious metals made gains to close out the week, but all in all this 5-day trading session was not especially beneficial to gold and silver. When all was said and done, gold managed to pick up 10 dollars while silver gained just shy of 10 cents to finish out the week. Platinum and palladium fell on the day, but neither metal lost much more than 5 dollars.
Industrial production in the United States took a dive for a third consecutive month. A major part of the reason industrial production was moving downward during December was due to the unusually warm weather that affected much of the United States. Officially, the Federal Reserve says that December industrial production fell by .4%, while November’s data was revised to a fresh reading of minus .9%. For those unaware, industrial production figures include utilities, mining, and manufacturing.
November’s revised data marks the single biggest monthly decline since 2009. Utilities are the real drag on industrial production as the warm weather we experienced over November and December meant that people did not need to heat their homes nearly as much as they would have if weather would have been more seasonal. Factory output was also somewhat disappointing, but it was not all that much of a factor in the grand scheme of things. With colder, more seasonal temperatures setting in across much of the nation, utilities may be able to bounce back in January and February.
Stocks in the United States and elsewhere around the world took a bit of a hit on Friday thanks to the continued decline of crude oil. Now hovering right around an even $29/barrel, crude oil is testing lows that we have not seen in more than a decade.
As it stands, two factors are driving the movement of crude oil’s price. For one, China is looking like it will continue to grow at an incredibly slow rate through the rest of the year. China performed poorly through much of 2015 and that trend is widely expected to continue right through this year. Being one of the biggest industrial players in the world, China accounts for a large quantity of crude oil purchases, and with the supply glut we are currently witnessing it is highly unlikely that crude oil will be able to make a marked recovery anytime soon.
In addition to this, the fact that Iranian sanctions are soon going to be lifted means that even more crude oil may be flooding the market. For years now, Western sanctions have stopped the shipment of crude oil from Iran to many countries located throughout Western Europe and North America. If sanctions are lifted according to plan, it is highly likely that the oil supply glut will grow even bigger and force spot values down even further.
For gold and silver, crude oil’s weakness will continue to push spot values downward. Today, however, that was clearly not the case.
All in all, this week was not a very good one for precious metals. Though there was plenty of economic data released in the United States, none of it had any very significant affect on global economic markets. As we look ahead to the early parts of next week, I imagine that trading will be a bit muted due to the fact that the Martin Luther King Jr. holiday is being celebrated in the US on Monday.