Posted on January 21, 2016
Gold Spot Price Open: $1,108
Gold Spot Price Close: $1,103
Change in Gold Spot Price: -$5
Silver Spot Price Open: $14.22
Silver Spot Price Close: $14.20
Change in Silver Spot Price: -$0.02
Gold and silver backed off slightly on Thursday thanks to some comments made by Mario Draghi of the European Central Bank. When all was said and done, gold lost about 5 dollars while silver moved downward by roughly 2 cents. Platinum and palladium finished the day mixed, but neither metal moved too far from where they began the day.
The US Dollar put a lot of pressure on precious metals as it recorded more than 2-week highs against the Euro on Thursday. In an official meeting, the European Central Bank held off on expanding monetary stimulus for the region, but hinted that more stimulus may be just around the corner. The move to hold off on stimulus came due to China’s weakness and general volatility across the global marketplace.
Joe Manimbo, senior market analyst at Western Union, told CNBC that, “Mr. Draghi certainly kicked open the door to action as soon as March. He sounded a concerned tone about global developments and how that can adversely impact already anemic inflation.”
For now, European economic policy is going to remain put, but that may change very soon according to many market experts. For now, however, we are left to simply sit back and analyze the direction the market is heading in. Should China continue to perform poorly through the rest of this month and into February, we may see the European Central Bank change their tone about monetary stimulus. This is something we will continue to keep a close eye on as things progress in Europe and elsewhere around the world.
For a second consecutive week, claims for unemployment benefits in the United States have ticked upward. This week, however, first-time claims for unemployment rose by 10,000, a number that was not expected by anyone. Now, the seasonally adjusted average for claims has moved up to 293,000 and is slowly but surely edging in on the ugly 300,000 mark.
Once you consider that expectations were for claims to remain under 280,000, it is quite easy to see how this week’s data is being viewed as disappointing. For gold and silver, this news may have helped nullify some more exaggerated losses that were experienced today. Typically, when US economic data comes back far worse than expectations, gold and silver benefit. Unfortunately, Mario Draghi’s comments on the potential for more European economic stimulus prompted the US Dollar to go on a nice rally; one that was enough to effectively bury precious metals for the day.
Adding to the poor news from the US Department of Labor today was the fact that the 4-week moving average of jobless claims moved up by nearly 7,000. The 4-week moving average is often viewed as more important than the weekly claims report because it gives investors a more realistic picture of how the job market is faring. After ending the year on a positive note, it sure seems like employment is struggling to begin this New Year.
Today was a poor day for gold and silver, but for most of this week both metals have traded within a fairly well-defined range. As we head into the final day of the week, I anticipate that things will be a bit quieter, especially across the US as the East Coast braces for a massive winter storm that is sure to wreak havoc. With that being said, it will be interesting to see if gold and silver can rebound to close out the 5-day trading session.