Gold Spot Price Open: $1,238
Gold Spot Price Close: $1,240
Change in Gold Spot Price: +$2
Silver Spot Price Open: $18.06
Silver Spot Price Close: $18.02
Change in Silver Spot Price: -$0.04
Precious metals had a rather quiet start to the week thanks, in part, to the celebration of the US Presidents Day holiday. When all was said and done, gold gained a few dollars while silver ended up losing roughly 4 cents. Platinum and palladium finished the day mixed, but neither metal ended up moving too far from where they began the day.
Markets Quiet as Investors Speculate Over Interest Rate Hikes
Precious metals did not do all that much moving on Monday, and this is mostly due to the fact that US markets were closed. Despite this, the investors that were active to begin the week were mostly speculating with regard to what the future holds for US monetary policy. We are still a few weeks out from the next FOMC meeting, but that is not stopping investors from wondering when rates will be raised as well as how much they will be raised by.
At this juncture, most investors are pointing to late Spring or Summer as the likely time when rates will be raised. The reason March’s FOMC meeting is so important is due to the fact that everyone is hoping that the FOMC will offer some info as to when a rate hike will happen. To be fair, the FOMC will likely remain as vague as always, but that is not going to stop speculation.
Report Indicates Metals May Weather Higher Rates
A report by Degussa opined that gold and silver might be able to weather higher interest rates and an appreciating US Dollar. In their report, Degussa made it very clear that increased safe-haven demand is likely going to help gold and silver spot values remain elevated. The report went on to say that, even if rates are raised in the near-term, they will still be fairly low in the grand scheme of things. When you look at historical interest rate averages, we are still near the very low end of the spectrum.
Whether you are talking about the financial distress facing countries like Japan and China, or the uncertainty surrounding US President Donald Trump, the fact of the matter is that there is plenty of safe-haven demand circulating currently. Among other things, the report said, “We may be moving towards a situation in which there is a parallel demand for US dollar as well as gold, with the US dollar being less of a substitute for gold but more of a complement. In other words: Gold investors may no longer fear that an appreciating US dollar would systematically depress the price of gold.”
We have seen this in recent history as spot values have remained elevated even as the USD Index inches higher and higher. The expectation is that safe-haven demand will continue to be a positive for spot values, and it is going to take something dramatic for that to change.
Wrap-Up
All things considered, Monday was a very quiet day across the global marketplace. There was almost nothing in the way of fresh economic data dealt, and the absence of US investors saw metals mostly move sideways. Upon markets’ open tomorrow, we would not be surprised to see safe-haven demand continue to drive spot values upward.
