Posted on January 29, 2016
Gold Spot Price Open: $1,118
Gold Spot Price Close: $1,120
Change in Gold Spot Price: +$2
Silver Spot Price Open: $14.34
Silver Spot Price Close: $14.34
Change in Silver Spot Price: NO CHANGE
Precious metals posted small gains to conclude this final week of January trading and are looking at weekly gains yet again. When all was said and done on Friday, gold added about two dollars while silver finished the day in about the same position it was in when it began. Platinum and palladium managed eek out gains, but neither metal made very big strides forward.
In a report published early Friday morning, the market was shown that the US economy did, in fact, cool off during the final 3 months of the year. According to the US Commerce Department, 4th quarter GDP grew on an annualized basis by just .7%. Playing into the slow rate of growth was the one-teo punch of cheaper crude oil prices and unseasonably mild temperatures across much of the United States through November. Basically, even though oil (energy) was cheaper, people did not feel compelled to purchase it because of the weather.
Now that things are beginning to stabilize, at least in the United States, many expect that the energy sector of the US economy will not be so quick to drive down the economy as a whole. This is especially true if the rumored OPEC talks are going to happen in the near future.
In case you missed it, yesterday saw a rumor circulate claiming that OPEC nations are soon going to convene for a meeting. Though it is unclear if this meeting is actually going to take place, and even more unclear what the topic of discussion will be, most are placing their bets on the meeting’s main topic being the prospect of reducing production in order to drive up the value of crude oil. It has even been rumored that Russia, a major player in the energy field, may be in on these supposed talks. I have my doubts about whether any progress will be made by OPEC as it relates to reducing the global oil supply, but it is more than clear that something needs to be done, and soon, in order to keep these oil-reliant economies afloat.
In an effort to spark inflation, the Bank of Japan announced today that they would now be pursuing a monetary policy based on negative interest rates. With oil prices continuing to slump, Japan’s economy was moving further and further away from its desired rate of inflation, and that is exactly what prompted Friday’s somewhat surprising move.
Looking to hit 2% inflation, the Bank of today also announced that it would be extending its expectations for when that target inflation number will be realized. The negative interest rate of .1% will be officially adopted on the 16th of February.
Finally, the BoJ announced that reducing inflation (eg. Driving it further into negative territory) further would not be counted out. In fact, if economic conditions permit, they have no qualms about intensifying the negative interest rate.
For gold and silver, even though minimal gains were realized this week, this was still a positive 5-day trading session. As we look ahead to next week, it will be interesting to see if safe-haven demand will continue to drive spot values upward. Being that oil prices are still faltering and very few equity markets have shown any marked signs of recovery from the past few weeks’ worth of losses, I anticipate that gold and silver will have a decent start to the month of February. In fact, there are a few market experts who believe the tide may be beginning to turn for the precious metals market. Whether this actually proves to be the case or not, however, remains to be seen.