Posted on November 27, 2015
Gold Spot Price Open: $1,074
Gold Spot Price Close: $1,059
Change in Gold Spot Price: -$15
Silver Spot Price Open: $14.35
Silver Spot Price Close: $14.18
Change in Silver Spot Price: -$0.17
Gold and silver have hit new multi-month lows on Friday to close out a fragmented, and poor week of trading. When all was said and done, gold lost closer to twenty dollars while silver edged downward by almost twenty cents. Platinum and palladium both fell on the day, with both metals losing closer to ten dollars apiece.
Gold and silver continued to suffer setbacks on Friday as increasing demand for US Dollars is taking away most interest in precious metals. On Friday alone, the USD Index improved by about .3% as more and more investors come to terms with the fact that interest rates are likely to be raised by the end of December. According to a number of different polls, the odds that the Fed will raise interest rates for the first time in nearly a decade have improved to 75%, up more than 40% from a month ago.
The Dollar will likely continue to do well, as a strong labor market in the US boosts spending and generally improves the overall outlook on the US economy. If monetary policy is tightened, I do not see gold and silver’s collective situation improving much as tighter economic policies make an investment in gold and silver much less appealing than an investment that pays out interest.
Bart Melek, head of commodity strategy at TD Securities, commented on the situation by saying, “We haven’t seen the dollar at these levels for a very, very long time. The market is expecting the Federal Reserve to be fully on the bandwagon.”
To be completely blunt, this past week of trading did not offer up much in the way of fresh data. Some US economic data was recorded, but these data points worked more in the favor of those who expect to see interest rates raised in December. In case you missed it, earlier this week we saw that September housing prices in the US rose by more than expected on the same day that we learned 3rd-quarter US GDP was revised upward to show growth of more than 2%.
With Tuesday of next week marking the first day of December, you can bet that the market will be wholly enthralled with the idea of interest rates potentially being raised. If you thought that November brought with it a load of speculation regarding the potential hiking of interest rates, December is looking like it will bring even more.
Unfortunately, gold and silver spot values are looking like they will maintain their subdued positons for much of the foreseeable future. At this point, even turmoil in the Middle East and Europe has not been able to come to the aid of gold and silver, so until a final decision on rate hikes is made, spot values very well may continue to suffer.
All in all, this week was fairly uneventful thanks to the Thanksgiving holiday sending most people home from work early. Gold and silver, of course, continue their decline and are now sitting at fresh multi-month and multi-year lows. Looking ahead to next week and the beginning of December, you can expect to hear much of the same commentary as we have been the last few weeks. The eyes of the world are on what the future holds for interest rates, and I do not expect that to change anytime soon.