Posted on January 21, 2015
Gold Spot Price Open: $1,295
Gold Spot Price Close: $1,294
Change in Gold Spot Price: -$1
Silver Spot Price Open: $17.95
Silver Spot Price Close: $18.18
Change in Silver Spot Price: +$0.23
Precious metals began the day making gains, but by the time markets closed their results were mixed. When all was said and done, gold lost only about a dollar while silver managed to gain more than 20 cents. Platinum and palladium lost a few dollars apiece today.
Some rumors in the form of news reports circulated prior to US markets opening today, and they claimed that the European Central Bank is, in fact, without a doubt, going to announce their quantitative easing measures tomorrow. This news gave investors to take some chances on stocks, and saw equity markets across Europe and the United States gain handsomely. As you might have guessed, stock market gains made today put some profit-taking pressure on precious metals.
As a result of this pressure, silver backed off from a daily high while gold saw gains of around 10 dollars turned into minor losses. Now we are left to wonder whether tomorrow’s supposed ECB announcement will result in safe-haven demand for gold and silver making a quick exit, or if investors will remain just as bullish on metals as they have been for the past two or so weeks.
Today, on the whole, was a quieter day simply because investors were mostly holding their positions ahead of tomorrow’s ECB gathering. While that was true, there was some noteworthy global economic data for investors to mull over. First, from China, it was reported that the chief of China’s central bank announced that lower crude oil prices are likely to contribute to China’s economic growth this year. This is good news for Asian investors, particularly because China has been doing extremely poor from an economic standpoint for the past year or so.
In other news, this time from Japan, the Bank of Japan announced today that its consumer price inflation outlook was being reduced from 1.7% for 2015 to an even 1%. Like China, Japan pointed to lower crude oil prices as the reason for their reduced inflation forecast.
Finally, it was reported in Europe that 5-year bond auctions held during the overnight and early morning hours saw record-low yields, perhaps indicating that investors across Europe were already convinced that the ECB was going to make a QE announcement tomorrow. Unfortunately for the Euro, the announcement that is expected to be made tomorrow will, in all likelihood, only work to devalue the currency further. While this is undoubtedly good news for the US Dollar, the greenback has not been performing all that well over the course of the past week or so after having backed away from multi-year highs. Still, the USD is in a far better position than many of its rival currencies.
It goes without saying that the whole attention of the marketplace tomorrow will be fixated upon the European Central Bank meeting and its expected outcome. At this point, anything other than a QE announcement would be perceived as shocking by global investors. I do anticipate that the Euro will suffer a bit in the wake of the meeting, but with this announcement having been expected to be made for some time now, I am not so sure the EU’s currency is going to depreciate all that much in a single day.