Gold Spot Price Open: $1,201
Gold Spot Price Close: $1,173
Change in Gold Spot Price: -$28
Silver Spot Price Open: $16.53
Silver Spot Price Close: $16.19
Change in Silver Spot Price: -$0.34
For a second consecutive day, the spot values of gold and silver are moving almost straight downward. When all was said and done, gold lost more than 28 dollars while silver was down by another 34 cents on the day. Platinum and palladium also edged lower today, but not nearly as severely as gold and silver. Since Thursday morning, the spot values of both gold and silver have depreciated significantly.
Dollar, Stocks Continue Pressuring Gold and Silver
In case you missed it, a combination of upbeat US economic data on Thursday and a more hawkish FOMC post-meeting statement on Wednesday doomed gold and silver to a week of significant losses. In just over 24 hours, silver has lost well over a half dollar in value while gold, per ounce, has fallen somewhere in the neighborhood of $50.
As a result of all this upbeat news regarding the US economy, both US equities as well as the US Dollar have seen great growth over the past 2 days or so. Now, as gold sits near a 4-year low, US equity markets are hitting record/multi-year highs and looking stronger than ever. As we look ahead to next week and all that it will bring, one cannot help but wonder if precious metals will be able to bounce back, or if technically-related selling will continue piling on the pressure such that spot values fall even further.
Bank of Japan Announcement Gives Equities, Dollar Even Bigger Boost
As if all that took place over the course of Wednesday and Thursday wasn’t enough, global equities as well as the US Dollar got yet another boost from a somewhat surprising announcement delivered by the Bank of Japan during the overnight hours.
According to multiple sources, the BoJ announced that it would soon be implementing even more aggressive monetary easing policies aimed at spurring economic growth. In addition to this, the move by the Bank of Japan is also said to be aimed at keeping deflationary pressures, the likes of which have plagued the Japanese economy for well over a decade now, at bay. Whether this, more aggressive, stance on monetary policy will work for Japan or not remains to be seen, but as of now, it is working in the favor of US equities and really only adding to the pressure being felt by gold and silver.
Price Inflation Remains “Worryingly” Low in the EU
Deflationary pressures have now been a mainstay in all conversations regarding the EU economy for some time now. Today, the deflationary fires were stoked upon the release of some less than stellar price inflation reports from the European Union.
According to reports published earlier this morning, October prices were only up by .4% on an annualized basis. This is a bit greater than the .3% year-on-year increase seen in September, but still a worrisome figure. Making matters worse was a report claiming that the core inflation rate across the EU was up by .7%, year-on-year, in October. This was slightly lower than September’s reading of +.8%. While most of this data is none too surprising considering what has gone on with the European economy over the past few months, but it does lend credence to the belief that the European Central Bank will continue to be forced to implement more monetary stimulus in an attempt to revive a poor-performing EU economy.
Wrap-Up
As we look ahead to next week, all eyes will remain fixated on both equity and currency markets. If the greenback and US equities continue to move forward upon the onset of the first trading week of November, it is likely that gold and silver spot values will continue to suffer. With some luck, however, metals may be able to bounce back by early next week thanks to bargain-hunting buying associated with extremely low prices. Though it is quite difficult to say with any degree of certainty what next week has in store for the precious metals market, I do know that it is going to be an interesting 5-day trading session.