Posted on November 05, 2014
Gold Spot Price Open: $1,170
Gold Spot Price Close: $1,141
Change in Gold Spot Price: -$29
Silver Spot Price Open: $16.09
Silver Spot Price Close: $15.39
Change in Silver Spot Price: -$0.70
Precious metals were hammered as a result of yesterday’s elections and are now sitting at multi-year lows. When all was said and done, gold lost close to 30 dollars while silver was down by more than 65 cents. Both gold and silver are now sitting at or around 4.5 year lows. Platinum and palladium both declined considerably on Wednesday as well.
Seeing as US equity markets were trending upward for a majority of the day and much of the last few weeks, it is safe to say that risk-appetite amongst investors is beginning to pick back up. Last night’s midterm elections in the United States only served to intensify that growing risk appetite as it was reported that Republicans had seized control of both the House and the Senate. Seen as being more pro-business and thus more likely to grow the economy, a Republican majority on Capitol Hill found favor with most investors.
Unfortunately, the growing confidence people are showing towards the US economy is not helping precious metals at all. At this point in time, any signs that the US economy is continuing to improve will be interpreted as meaning interest rate hikes are on the way. This, of course, will only serve to further limit the buying interest in gold, silver, and other physical precious metals as alternative investments.
The US Dollar continued gaining strength on Wednesday on the back of another positive economic outlook report as well as high expectations for Friday’s jobs data from October. Against the Yen specifically, the greenback rose to a 7-year high on Wednesday and is only continuing to gain strength after the Bank of Japan announced additional injections of cash they plan on delivering to the Japanese economy in the near future.
Further helping the Dollar was a report saying that initial expectations are that more than 230,000 new jobs were created during the month of October. After September’s jobs data showed job increases of nearly 250,000 when increases of only 215,000 were expected, it makes sense that this month’s expectations are so high. If the data does meet or beat preliminary expectations, I would not be at all surprised to see the greenback surge even higher.
In the overnight hours, China’s services PMI reading came in at 52.9 in October and was considered by the market to be a less than appealing. In Europe, the Markit composite PMI was reported as being up by just .1 from September to October. This reading was also considered to be downbeat and further dampened the overall economic outlook of the European Union.
Another report from Europe indicated that retail sales across the EU were down by 1.3% from August to September. This is the single largest monthly decline seen in more than 2 years. Making matters worse, a 5-year bond auction in Germany today scored a record-low average yield of just barely over .10%. If nothing else, this data makes tomorrow’s European Central Bank meeting that much more important.
Looking ahead to tomorrow, investors won’t have much time to relax due to the European Central Bank meeting that is scheduled to take place. As it stands, there are a lot of people who would not be at all surprised to hear of further quantitative easing measures being taken across the EU in order to spur economic growth. Then, on Friday, the attention of investors will shift again, this time to the release of the US employment data from October. Though there are only two days left in this week, there is still plenty of economic happenings and data points to pay attention to, all of which stand the chance of having some type of impact on the precious metals market.