Posted on January 25, 2016
Gold Spot Price Open: $1,100
Gold Spot Price Close: $1,110
Change in Gold Spot Price: +$10
Silver Spot Price Open: $14.14
Silver Spot Price Close: $14.31
Change in Silver Spot Price: +$0.17
Gold and silver both made gains to begin the week thanks to worries stemming from oil’s continued weakness and a few other factors. When all was said and done, gold made a gain of ten dollars while silver improved by almost twenty cents. Platinum and palladium both ended the day in about the same spot as where they started.
Stocks from the US and many other parts of the world were looking to extend a rally that began late last week, but by day’s end the losses really began to pile up. Driving the late day sell-off was the fact that crude oil once again began sliding fairly dramatically. With oil’s slide came a lot of concern that prompted investors to more readily seek out safe-haven assets such as gold and silver.
Thanks to energy and mining shares taking massive steps backwards to close out the day, the S&P 500 fell by almost 2% before markets closed. Crude oil gained nicely to close out last week and many people thought those gains would be extended into this week, but such was not the case. Now, with oil trading right around $30/barrel and a supply-glut still very much in existence, the marketplace is anxious about what the future holds for oil and all the equities that rely so heavily on it.
In the words of John Carey, of Pioneer Investment Management, “Obviously investors are working through some potentially difficult issues in their minds about the state of the world economy. It might might be a while before we emerge from this period of uncertainty. I’ve noticed that pattern of end-of-day volatility and wonder if there are programs that kick in at the end of the day that contribute to that.” For gold and silver, the near-term may see spot values gain simply because investors do not know what to do about oil’s weakness. We saw this last week, and this week has gotten off to a nice start for precious metals as well.
Though many major US companies have already downgraded their expectations for 2016 growth, wage growth for employees is expected to grow nicely. The National Association for Business Economics released the results of a survey that explained how many companies are expecting wages to grow this year.
Officially, the survey saw 70% of respondents expecting GDP to grow by up to 3%, which would be about in line with the growth seen in recovery years following the Great Depression. The Commerce Department is expected to release growth expectations on Friday of this week, and that is sure to be a big point of interest for investors.
With wage growth expected to be robust, that does not mean that hiring is going to follow suit. In fact, many companies are anticipating that they will ramp down efforts to bring on new employees. Of course, this all depends on the industry, but is something that is almost universally expected.
As we head further into this week, the main focus for investors will be the price action of crude oil and the equities that are so closely related to the commodity. It would not be all too surprising to see the spot value of oil to keep falling, and if this does prove to be the case precious metals may stand to benefit. For now, investors can happily reflect on what has definitely been an upbeat start to the week.