Gold Spot Price Open: $1,066
Gold Spot Price Close: $1,060
Change in Gold Spot Price: -$14
Silver Spot Price Open: $13.81
Silver Spot Price Close: $13.84
Change in Silver Spot Price: +$0.03
Precious metals backed down again on Tuesday as the quiet marketplace zones in on the Fed’s latest meeting which kicked off today. When all was said and done on Tuesday, gold lost about 6 dollars while silver pushed out gains of three cents. Platinum and palladium managed to gain on the day, but those gains were not substantial in nature and ended up mostly being ignored by the market.
Dollar, Stocks Gains As FOMC Eyed
Against the Yen and the euro on Tuesday, the greenback managed to regain some of the losses incurred towards the end of last week.
As for the Fed’s meeting which kicked off today, there is a large contingent of investors who believe that rate hikes will be announced shortly after the conclusion of today and tomorrow’s meeting. Officially, polls indicate that there is a 78% likelihood that tomorrow will bring about the first rate hike in more than 8 years. With such an overwhelming majority of investors thinking that this week will bring about a rate hike, most investors are looking past tomorrow and are contemplating what the investing landscape will look like with low, low borrowing costs.
As for what this means for gold and silver, the immediate future is not looking very promising as a stronger Dollar will more than likely continue to push spot values downward. Even with the expectation that rates will be raised, no one is counting that as a guarantee. According to Kathy Jones, chief strategist at Charles Schwab, “It’s really very cautious. There’s so much now up in the air that I don’t think people want to take big positions.” For this reason, we may see a lot of reaction in the wake of this week’s meeting; perhaps more than we even anticipated.
US Prices Data Delivered Prior to Fed
The Federal Bureau of Labor Statistics reported on Tuesday that consumer prices in the US during November remained unchanged from the month before. Despite remaining unchanged in November, consumer prices for the last 12 months have risen by roughly .5%.
When you pick apart the report, you can see that many sectors of prices rose during November, but the continuously falling nature of energy prices helped to offset those rises quite well.
Today’s pricing data did not do much in the way of moving markets seeing as most investors were content to simply hold their positions ahead of tomorrow’s expected Fed decision. To be quite honest, this data was mostly ignored.
Wrap-Up
It shouldn’t come as much of a surprise that the marketplace was mostly quiet today seeing as investors may potentially have big decisions to make come this point tomorrow. The Fed, as is typical, did not offer any insight whatsoever on the first day of their meeting, and will save any and all commentary for the Q&A session that has historically been held in the immediate wake of the FOMC meeting.
Something that is important to consider with so many people expecting rates to be risen is that inflation has been a non-factor in the US economy for some time now. Though incredibly unusual in an economy that has recovered as much as the United States has, the lack of inflation is what many market experts have pointed to as the reason why the Fed has not yet raised rates despite it being a possibility on so many other occasions. Though the inflation figures have not really changed in recent history, it seems as though the Fed is going to go against its own mandate and proceed with raising rates anyway. How this will affect the US economy in the long run, however, remains to be seen.
