Posted on November 21, 2014
Gold Spot Price Open: $1,192
Gold Spot Price Close: $1,202
Change in Gold Spot Price: +$10
Silver Spot Price Open: $16.24
Silver Spot Price Close: $16.49
Change in Silver Spot Price: +$0.25
Precious metals spent much of Friday gaining value thanks to a somewhat shocking announcement from the Chinese central bank. When all was said and done, gold picked up more than ten dollars while silver was able to add closer to 40 cents. Both platinum and palladium added close to 20 dollars apiece.
In recent months, there has been a lot of talk surrounding the movement and changing of interest rates. While much of that talk has been with regard to US interest rates, today brought about some news regarding interest rates in China.
Proving their intentions to improve the condition of the Chinese economy, officials today decided that they would raise their country’s benchmark interest rate; the first time they have done this since mid-2012.
Officially, the one-year lending rate was reduced by 4 tenths of a percentage point to 5.6%. In addition to this, the one-year lending rate was reduced by .25% to 2.75%. These changes go into effect tomorrow, but the impact these moves made on the marketplace have been ongoing all day. For gold and silver, today’s news of reducing interest rates provided a bit of boost as it is thought that more Chinese citizens will seek out precious metals as alternate investments in order to protect themselves from what are very uncertain economic conditions. Demand for physical metals has been on the up and up as of late, but is looking like it will pick up even more considerably in the near future.
Today was an upbeat today for almost all US investors as both the US Dollar as well as US equities added value alongside gold and silver. While it is nice to see all three asset-classes moving forward, one is led to wonder just how significant gold and silver’s gains would have been if the greenback and stocks did not improve so drastically today.
It wasn’t only US stocks who jumped up upon the release of today’s Chinese data either, as European stocks also fared really well today. Now, as the market’s attention slowly but surely shifts, it will be interesting to see what, if any, policy changes are enacted as a result of the upcoming European Central Bank policy meeting. With the comments made by Draghi earlier this week (claiming that quantitative easing measures are still on the table), the market is already anticipating that some policy change is destined to come as a result of the ECB meeting expected to be held within the next two weeks.
European Central Bank president Mario Draghi has been in and out of the news this week and will likely continue to do exactly that for the next few weeks. Today, while speaking in Frankfurt, Draghi highlighted weak economic activity indicators from across the EU and reiterated that he and his colleagues are prepared to “broaden the size, pace and composition of its asset purchase program” if the need is determined to have arisen. As such, it is almost a guarantee that we will continue keeping a close eye on anything and everything happening in the European Union over the coming 14 or so days.
All in all, this week ended up providing us with plenty of information and data to mull over. From the United States, a few upbeat employment reports were made public on Thursday and re-strengthened the overall outlook on the US economy. We also received more downbeat news from the EU, though this is none too surprising at this point. As we look ahead to next week, it will be interesting to see if metals are able to retain gains made today, or if this upcoming Monday will see metals devalued once more.