Posted on January 20, 2016
Gold Spot Price Open: $1,091
Gold Spot Price Close: $1,102
Change in Gold Spot Price: +$11
Silver Spot Price Open: $14.19
Silver Spot Price Close: $14.21
Change in Silver Spot Price: +$0.02
Gold and silver spot values moved upward on Wednesday thanks to an increased level of anxiety being exhibited by global investors. When all was said and done, gold managed to gain close to fifteen dollars while silver added five cents. Platinum and palladium bounced between small gains and losses all day, but both metals finished the day near unchanged.
The global marketplace is showing clear signs of anxiety as equities across the globe sold off at an alarming rate on Wednesday. Stocks markets across Asia and Europe, as well as those in the United States, finished Wednesday solidly lower after some massive sell-offs. The United States’ Dow Jones, for example, spent parts of the day near two-year lows before rebounding slightly near the end of the day.
As many people have probably guessed by now, stocks are being sold due to the slumping price of crude oil. Now well below a 12-year low and hovering around $27/barrel, crude oil is floundering with no end in sight. As we have touched on before, it is a bit of a one-two punch driving the spot value of oil lower. For one, you have China’s slow economic growth which has translated into a muted demand for crude oil, which is used in all sorts of industries. On the other hand, Iranian sanctions being lifted by Western nations may soon mean that many millions of barrels of crude oil will be sold in markets that they have not been in for years.
For gold and silver, crude oil weakness typically means that spot values will suffer as well, but such has not proven to be the case this week. The reason for this is due to the fact that people are so anxious about the falling price of crude oil that they are prompted to find safety in the precious metals market. Now, the real question is whether gold and silver can sustain these gains or perhaps even build upon them as we head deeper into the month of January.
As for when Iranian crude oil might actually make its way onto Western markets, that much is still up in the air. Most people are thinking that this is a process that will happen over a quick period of time, but governments being the way that they are it may be several months before this oil is made available. In the meantime, the real question is what existing refineries are going to do. Very soon, assuming the price of oil continues to fall, it will soon be too expensive to produce and refine oil that many refineries may be forced to sit on the sideline for a given amount of time.
There are a lot of question marks for this year and we are not even 1/12th of the way through. All of this uncertainty, as it usually does, has come to the aid of precious metals. Spot values were looking dismal only a few weeks ago, but in light of recent developments have begun showing some signs of life. This and much more will be a continued daily focus for us as it is a fluid situation that seems to change with each passing day.
All in all, Wednesday was not the most exciting day across the global marketplace as there was not much fresh information offered to investors. Tomorrow, some more economic data from the US will be made public, most important of which is the weekly jobless claims report from the United States. With retailers and other businesses laying off seasonal employees, my estimation is that jobless claims are going to be even more plentiful this week than they were a week ago. That much, however, remains to be seen.