Gold Spot Price Open: $1,076
Gold Spot Price Close: $1,062
Change in Gold Spot Price: -$14
Silver Spot Price Open: $14.00
Silver Spot Price Close: $13.75
Change in Silver Spot Price: -$0.25
Though not all that surprising, both gold and silver conceded value to open up what is an especially important week of trading with the FOMC meeting set to kick off on Tuesday. When all was said and done today, gold lost more than ten dollars while silver accumulated losses of more than 20 cents. Platinum and palladium both added value on the day, but neither metal advanced by more than 10 dollars.
Fed Decision Looming
As you probably expected, this week is going to see the attention of just about every investor turn towards the Tuesday/Wednesday meeting of the Federal Open Market Committee. For the past 12 or more months, every FOMC meeting has been hawked over by investors who were convinced that interest rates would be boosted from near-0 levels. Up to this point, no such rate hike has taken place, but this week is when most people think that will change.
As it stands, the overwhelming majority of the global marketplace is convinced that interest rates will be hiked sometime within the next few months, but think that the announcement will be made in the wake of the FOMC meeting on Wednesday. Thanks to higher interest rates generally limiting the buying interest for gold and silver, it is no wonder that spot values have fallen considerably over the past few weeks and months. Now, investors are wondering just how far downward precious metals are going to fall before the slide is halted, and that is a question that is not so easy to answer. For now, however, even if gold and silver halt their respective slides, sustained gains do not seem like something that will occur anytime in the near future.
Gas Prices Fall as Oil Does Too
In addition to current global market conditions being hard on precious metals, they are also working against any upward movement being made by crude oil. The leading commodity, which hit a 7-year low last week, has been on the decline for much of this past year thanks to a supply-glut. Fearing that even more oil will soon make its way to the global market, investors are ridding themselves of crude oil investments and seeking safe-haven elsewhere.
For precious metals, this is bad news simply because the price action of crude oil often dictates that of gold and silver. Really, what we are seeing now is a two-punch hit of higher interest rates and lower crude oil prices that are both pushing precious metals downward. The thing is, crude oil is not expected to regain much of any value anytime soon due to the belief that now-embargoed Iranian oil may soon be back for sale on Western markets. If this does end up being the case, the already huge global supply glut will grow even bigger.
For consumers at the pump, seeing a gallon of gas cost less than $2 is amazing, but for your average precious metals investor, it is anything but that.
Wrap-Up
Truth be told, Monday did not offer up much of anything that can be described as fundamental, markets-moving economic data. In fact, the first day of this 5-day trading session was generally quiet as investors geared up for the expected rate hike announcement. Now, it is not so much a matter of if rates will be hiked, but rather how quickly and by how much they will be hiked by. That much we hope to find out Wednesday afternoon.
