Gold Spot Price Open: $1,076
Gold Spot Price Close: $1,075
Change in Gold Spot Price: -$1
Silver Spot Price Open: $14.23
Silver Spot Price Close: $14.25
Change in Silver Spot Price: +$0.02
After metals opened up the week posting two consecutive days of losses, Wednesday saw both gold and silver eek out small gains. When all was said and done, gold lost a dollar or so while silver managed to gain about 2 cents. Platinum picked up about twelve dollars on the day, while palladium’s gains were more modest at about three dollars.
Metals Bounce Around on Quiet Day
Despite a USD Index that trended sharply lower today, gold and silver did not manage to make very large gains. What did help precious metals, however, is the fact that crude oil ticked upward after a few consecutive days’ worth of losses. After crude oil moved down toward a 7-year low of ~$37/barrel, the early parts of this morning saw a bit of a rebound. Shortly thereafter oil’s spot value moved back downward slightly.
Once again, it must be reiterated that the weakness on the part of crude oil is causing weakness on the part of most other commodities. Not only is this driving the price of gold and silver downward, it is limiting buying interest in general. Finally, global equity markets, specifically the energy sectors of said markets, are also feeling the effect of crude oil’s weakness. Without oil moving upward and sustaining those gains it is going to be extremely difficult for any other commodities to do the same.
China Lowers Yuan’s Peg Against USD
Before US markets opened today, it was announced that China’s Central Bank decided to decrease the Yuan’s peg against the US Dollar to the lowest point in about four years. By lowering this peg, China’s central bank is hoping that demand for Chinese-produced goods will increase and, in turn, spur economic growth that the country so desperately lacks at the present moment.
More Chinese data was dealt during pre-market hours, and it showed that producer prices were down by about 6% on an annualized basis. Consumer prices, on the other hand, rose by 1.5% on an annualized basis. As surprising as it may sound, today’s Chinese data bested the expectations of market experts; something that we haven’t seen from the country for some time now.
FOMC Meeting Called Into Focus
As we enter the latter part of this week, the attention of investors is shifting to next week’s FOMC policy meeting. As you are likely well-aware, the majority of investors globally are expecting that the FOMC will announce that interest rates in the US will be risen for the first time in more than 8 years.
This has long been an expectation, but this time it seems as though interest rates might actually be raised. As for what this means for gold and silver, it is tough to say. Higher interest rates increase the opportunity costs of holding precious metals in lieu of interest-bearing investments, and this is a major part of the reason spot values have been declining consistently. With that being said, however, there is a contingent of investors who feel as though the interest rate hike announcement, should it be made next week, will be mostly overlooked by investors. It will be interesting to see how next week plays out.
Wrap-Up
Wednesday was yet another mostly lackluster and slow day across the global marketplace. For gold and silver, the small gains that were made today are nothing to write home about because market conditions are still stacked up against gold and silver. As we look forward to the last two days of the week, you can bet that speculation regarding next week’s FOMC meeting will pick up.
