Posted on November 17, 2014
Gold Spot Price Open: $1,188
Gold Spot Price Close: $1,187
Change in Gold Spot Price: -$1
Silver Spot Price Open: $16.37
Silver Spot Price Close: $16.19
Change in Silver Spot Price: -$0.18
Precious metals were able to sustain last Friday’s gains over the weekend, but today brought about some decent losses as the US Dollar surged. When all was said and done, gold lost about 4 dollars while silver was down by more than twenty cents. Platinum and palladium ended the day mixed, with platinum down by more than ten dollars and palladium up by a few dollars.
One of the most consistent factors in the marketplace over the course of the past few months has been the lack of growth across the European Union. To put it bluntly, the EU economy has stagnated for most of this year and is not looking like it is going to improve anytime soon. Because of this, the investing world has been wondering lately what, if anything, the European Central Bank will do in order to combat this period of economic stagnation and decline. Recently, it was suggested that the European Central Bank should pursue quantitative easing measures similar to those employed by the United States for the last few years.
Today, we got some news with regard to the EU’s possible implementation of quantitative easing measures via a statement made by ECB president Mario Draghi. In his statements, Draghi alluded that the ECB may soon enact purchases of a variety of assets, including government bonds. Today he was quoted as saying, “Other unconventional measures might entail the purchase of a variety of assets, one of which is government bonds.”
Up to this point, the ECB has pursued some measures aimed at encouraging economic growth, such as slashing interest rates and approving the purchase of some private-sector bonds, but they have failed to follow in the United States’ footsteps with regard to the purchase of government bonds.
As a result of today’s comments from Draghi, the Euro currency was dealt a bit of a blow while European stocks were offered some underlying support. In addition to this, you can expect that there will be a lot of investor attention surrounding the next ECB policy meeting.
Not helping gold and silver at all today was the upward movement of the USD Index, which began adding value before US markets even opened today. As the weeks pass, investors are becoming increasingly confident that the US economy can withstand higher interest rates. As it stands now, a majority of investors are convinced that interest rates will be raised sometime within the next year, though the exact date a tax rate increase will begin has yet to be established.
The outlook on the Japanese economy was dealt another blow on Monday as it is now officially confirmed that Japan is experiencing recession. According to a report made public during the overnight hours of Sunday, Japan’s GDP, on an annualized basis during the third quarter, declined by more than 1.5%. The fact that GDP growth was negative was enough of a cause for concern, but add this to the fact that expectations were for more than 2% growth and you have one of the most dismal economic reports we have received from Japan in recent history.
This news played a role in the downward movement of most global equities today, including stocks from the United States. By the end of the day, however, US stocks were able to recover from their initial declines and finished posting mixed results. As we move forward, it will be interesting to see what the Bank of Japan does to curb pressures created by recently weak economic growth.
All in all, today was a fairly quiet day in the United States. Abroad, however, things were a bit more active with Draghi making his comments and Japan’s GDP coming back so weak. I expect that the rest of the week will be similarly as quiet as today was due to there generally being a lack of economic data from the United States. Still, if gold and silver can remain in the range they traded in today for the duration of the week, that would be considered by most to be victory.