Posted on November 04, 2015
Gold Spot Price Open: $1,119
Gold Spot Price Close: $1,111
Change in Gold Spot Price: -$8
Silver Spot Price Open: $15.33
Silver Spot Price Close: $15.18
Change in Silver Spot Price: -$0.15
For a third day this week, precious metals declined across the board on more hawkish comments from the chair of the Federal Reserve. When all was said and done on Wednesday, gold lost close to another ten dollars while silver’s losses once again eclipsed 10 cents. Platinum also ended the day down by about ten dollars, while palladium declined by more than fifteen dollars.
Janet Yellen, chairperson of the Federal Reserve, spoke on Wednesday in front of the House Financial Services panel and reiterated the statement delivered by the Fed not too long ago. That message, of course, is that December interest rate hikes are most definitely still on the cards and should not be counted out quite yet.
In her statement, she said, “Now no decision has been made on that and, what it will depend on, is the FOMC’s assessment at the time. That assessment will be informed by all of the data that we collect between now and December.”
For me, this does not necessarily guarantee a rate hike next month, but it definitely does leave the door open for the hike to take place. In order for this to happen, one would think that the overall tone of economic data from the United States is going to have to improve. If it continues along its presently downbeat path, I am not so sure the Fed will be confident enough to increase rates before the end of the year.
With all that being said, today’s comments by Yellen were enough to lift the USD Index and propel the Dollar. So long as rate hikes are expected—which, for all intents and purposes they currently are—the US Dollar will more than likely continue along its upward trajectory. This, of course, is not so good news for gold, silver, or any other precious metal.
For much of this past year, the housing market in the United States has shown marked recovery from the financial crisis of roughly 6 years ago. With new home sales and existing home sales coming back upbeat more often than not, it is clear to see that Americans are feeling more comfortable spending their money on big-ticket items such as houses.
With higher interest rates, there is a very real possibility that the housing market in the United States will suffer. When asked about the possible impact a hiking of interest rates would have on the still recovering housing market, Yellen insisted that no interest rate hike would threaten the recovery of this sector of the economy. If rates are, in fact, hiked, it will be interesting to see if Yellen’s projections are correct, or if higher interest rates will limit buying interest…especially on the part of first-time home buyers.
Wrapping up today’s data stream was the payment processor ADP’s analysis of private-sector job growth during the month of October. According to ADP, the private-sector was able to create just more than 180,000 jobs, which fell right in line with expectations. Unfortunately, however, September’s job creation was revised downward from 200,000 new jobs created to a new tally of 190,000.
Wednesday featured a bit more activity across the marketplace, mostly thanks to Yellen’s comments on the possibility of December rate hikes. Looking ahead to the latter part of the week, the eyes of investors are slowly but surely turning to the release of the Labor Department’s monthly jobs report, which is due out by week’s end. This is just one of many data points that will play a direct role in determining whether or not interest rates will be raised at December’s FOMC meeting.