Posted on November 19, 2015
Gold Spot Price Open: $1,071
Gold Spot Price Close: $1,084
Change in Gold Spot Price: +$13
Silver Spot Price Open: $14.16
Silver Spot Price Close: $14.33
Change in Silver Spot Price: +$0.17
Precious metals rebounded slightly on Thursday after a long string of consecutive losses. When all was said and done, gold managed to gain a bit more than 10 dollars while silver managed to gain more than 20 cents. Platinum and palladium made gains on the day too, but neither metal gained more than ten dollars.
The US Dollar took a noticeable dive on Thursday after performing far better than expected for the last two weeks. Basically, the greenback’s decline today is being attributed to investors cashing in on recent gains made by the Dollar. Still in a good position, I imagine that the greenback will be back to making gains before long. Perhaps even by tomorrow. Naturally, the Dollar’s decline gave precious metals some room to venture forward, and that is exactly what we witnessed throughout the latter part of the day.
The Dollar’s movement upward in recent weeks can be directly tied to the overriding belief that interest rates in the US will be raised at December’s Federal Reserve meeting. Some market experts feel as though the Dollar has even more upside potential, as they do not think the interest rate hike has been completely priced in quite yet. Some are saying that the rate hike has been 60% of the way priced in, which means that the Dollar very well might have room to move even further upward. For gold and silver, this is not such upbeat news.
The Federal Reserve offered a welcomed change in their rhetoric from the minutes from their most recent meeting. As opposed to being wholly cryptic with regard to potential shifts in policy, the Fed is making it very clear that December rate hikes are not only a possibility, but are very likely to take place.
The minutes from October’s Fed meeting were full of info, but little of it was more important than what was said about rates. Simply put, the Fed feels as though the US economy will be ready for higher rates by year’s end. The minutes themselves said, in part, “While no decision had been made, it may well become appropriate to initiate the normalisation process at the next meeting.”
The minutes went on to say that unanticipated, major events still threaten to prevent rate hikes from occurring, though those are nearly impossible to factor in.
Dennis Lockhart of the Atlanta Federal Reserve was quoted on Wednesday as saying, “I am comfortable with moving off zero soon, conditioned on no marked deterioration in economic conditions.” Interest rates have been at near-0 levels since the final weeks of 2008 when the Fed was pursuing measures aimed at helping the US recover from the economic recession of the time. Now that most people agree that the US has since recovered from such horrible economic conditions, it follows that rates will soon be on the rise.
As we look forward to the final day of the week, I expect that the story will not change entirely too much. Interest rates will be on the minds of investors everywhere until they are or aren’t risen in December. Unfortunately for gold and silver, this likely means that spot values will have almost no opportunity to move forward. We witnessed this this week as the terror attacks in Paris failed to move spot values much at all. Normally, largescale acts of war tend to bolster safe-haven demand for gold and silver and that simply did not happen this time around. For me, this tells me that investors are holding steadfast to the belief that rates will be lifted in December.