Gold Spot Price Open: $1,166
Gold Spot Price Close: $1,162
Change in Gold Spot Price: -$4
Silver Spot Price Open: $17.19
Silver Spot Price Close: $16.88
Change in Silver Spot Price: -$0.31
Precious metals lost some ground on Tuesday as the FOMC meeting kicked off amid a lot of anticipation. When all was said and done, gold lost about 4 dollars while silver lost just more than 30 cents. Platinum and palladium on the other hand, both gained on the day, albeit marginally.
Gold Loses Ground as FOMC Meeting Kicks Off
Precious metals are being pulled in two directions as higher crude oil prices are helping provide support while the anticipated rate hike is continuing to push metals downward. Despite the rate hike mostly being priced in already, there are still quite a few last-minute movers who are finally coming to terms with the very high likelihood of the rate hike announcement being delivered this week. In fact, we are receiving word that, as far as percentages go, there is a 100% likelihood that a rate hike will be announced this week.
Gold and silver are not being pressured by the Fed alone, however, as the USD Index has shown a bit more strength today as well. Despite recent pullbacks, the greenback has been strong for the last month or so ever since Donald Trump was announced as President-elect of the United States.
There is very little in the way of US economic data due out today or tomorrow and we fully anticipate that most investors will be holding their positions before the post-meeting statement expected to be made sometime early tomorrow afternoon.
Crude Oil Follows Through
After surging to a 16-month high to begin the week, very few people would have been surprised to see crude oil pull back to some extent today. Instead, we are seeing the commodity continue along its recent tear thanks to yesterday’s announcement that non-OPEC nations are going to join OPEC in cutting daily production of crude oil. Having been in the midst of a supply-glut for well over a year now, this is the first real opportunity for crude oil spot values to move forward.
Perhaps also lending support to crude oil, and thus precious metals, is the fact that US Presidential-elect Donald Trump announced yesterday that he would be appointing ExxonMobil’s CEO, Rex Tillerson, as his secretary of state. Though there is nothing to indicate that Tillerson has much of any government experience, investors see this as a move that can do nothing but benefit energy companies. As with any move made by Trump, this one is not without its controversy, but so long as Tillerson can make it through the Senate-led confirmation hearing, he will assume Hillary Clinton’s old role in the US government.
As we make our way through the rest of the week it will be interesting to see just how far the crude oil rally can extend. We have not seen any sustained strength from the commodity for quite some time, so this will be something to keep an eye on.
Wrap-Up
As far as economic data from the US and elsewhere around the world is concerned, Tuesday did not yield much of it. Instead, we are seeing investors focus solely on the FOMC’s policy meeting, which kicked off this morning. Tomorrow will bring about the post-meeting speech from the Fed, although almost everyone is in agreeance with regard to what they can expect from said speech. What will really be interesting, however, is to see just how many details are divulged by the Fed. The United States’ central bank historically tends to be quite secretive, so apart from them announcing that a rate hike will, in fact, be happening, it will be intriguing to see if we will know just how drastic of a hike it will be and when it will officially be going into effect.
