Gold Spot Price Open: $1,257
Gold Spot Price Close: $1,258
Change in Gold Spot Price: +$1
Silver Spot Price Open: $17.51
Silver Spot Price Close: $17.49
Change in Silver Spot Price: -$0.02
Precious metals didn’t do particularly well on Wednesday, but did not do overly poorly either. When all was said and done, gold ended up gaining a dollar while silver posted losses of a few cents. Platinum and palladium both also did very little moving, with platinum down 8 dollars while palladium finished in just about the same spot it was in when the day began.
Stronger Dollar Derails Metals Recovery
Via bargain-hunting and short-covering, precious metals were and have been trying to work their way back from last week’s losses. Unfortunately, the idea that interest rates will be raised in December is something that continues to provide the US Dollar with strength. For the past week or more, the USD Index has been gaining against rivals at seemingly every turn. Naturally, a stronger Dollar is something that is always going to weigh on the progress of precious metals.
As far as potential interest rate hikes are concerned, the chances for a hike in December are sitting somewhere between 55% and 65% at the present moment in time. This may cause you to wonder why no one is talking about the potential for a hike in November, but the answer to that is simple: the upcoming presidential election. Election years, and especially the month in which the election actually takes place, sees complete and total focus turn to who is elected and how the election process unfolds.
Being that November’s FOMC policy meeting will take place just prior to the November 8th election, it should not come as much of a surprise if the Fed refrains from making any policy changes whatsoever. For precious metals, this is more or less a non-factor, because even though rate hikes are not going to happen this month or next (according to most), the investing world is confident that they will take place before year’s end. Of course, there is still no guarantee that rate hikes will be touched even in December. As has been the case for such a long time, we will continue to analyze the potential for rate hikes from every possible angle until more concrete information is known.
FOMC Minutes Digested by the Market
Perhaps the biggest data point of the week came today in the form of the minutes from the FOMC’s latest policy meeting. As we already know, the Fed, in their last meeting, did not make any changes to policy and shed very little light on when that might change. The minutes ended up providing just as little information as it showed a Federal Reserve that is divided, but holding the general opinion that, so long as the economic data continues to be positive, rate hikes are going to come sometime in the near future.
The marketplace as a whole did not really react to what happened today, mostly because very little in the way of fresh information was offered. The FOMC loves being secretive about what they are going to do and when they are going to do it, and with the prospect of raised rates that is exactly what we are witnessing. Though it was pointed to that rate hikes are likely to come sometime in the near future, we yet again have very little idea what exactly that means.
Wrap-Up
At the end of the day on Wednesday, not much has changed from the day before. Apart from the FOMC minutes, things have remained fairly stable. The US Dollar is continuing to perform extremely well, and that will more than likely remain the case so long as the case for raised interest rates grows more credible.
