Gold Spot Price Open: $1,225
Gold Spot Price Close: $1,231
Change in Gold Spot Price: +$6
Silver Spot Price Open: $15.32
Silver Spot Price Close: $15.29
Change in Silver Spot Price: -$0.03
Precious metals performed well again on Wednesday as spot values seem to be gaining back the momentum that was lost last week. When all was said and done, gold gained more than five dollars while silver ended up losing a few pennies.
Upcoming G-20 Meeting to Focus on Creating Financial Stability
Now only 2 days away from the next G-20 Summit in Shanghai, investors and market experts are wondering what leading global economies plan on doing to combat this period of very slow, and at times negative, growth. Major topics at Friday’s meeting will be how economies can combat the continuously falling price of crude oil as well as the poor performance of China’s economy. In addition, there will be discussion about possibly altering the structure of the Chinese economy, however it is unclear how receptive the Chinese government will be to any of the ideas discussed regarding this point.
Early reports are showing that one of the biggest topics of the first day of meeting will be the structural changes China is planning on making to its economy. Structural reforms will be aimed at altering the economy such that a period of poor economic data the likes of which we are currently witnessing do not play out over and over again in the future.
US monetary policy will also be a topic of discussion, as the world waits to hear if and when the Federal Reserve will move to further increase interest rates. This is a major topic for the G-20 meeting due to the fact that December’s rate hike sparked the mass exodus of funds from emerging economies, thus helping contribute to the growing economic slowdown. If further rate hikes are pursued, one cannot help but wonder how good this is for the wider global economy. The meeting is set to last through the day Saturday, so I am sure it is something that we will be talking about upon the opening of markets on Monday of next week.
New Home Sales, Stocks Down
Stocks opened the day in poor fashion and that is likely a major reason behind precious metals’ nice gains today. This now marks two consecutive days where equities from the US and elsewhere around the world suffered.
Perhaps playing into equities’ downturn today was the fact that new home sales were reported as being far poorer than originally anticipated. According to the US Commerce Department, sales of new homes in January came back 9.2% weaker than they did in December. Now, the annualized rate of new home sales has fallen below 500,000 after being just a few thousand short of 550,000 in December. Expectations were for this figure to fall, but not for it to fall as drastically as it did. With the median price of homes falling last month, there is a bit of concern that today’s data may be the first of a stream of poor housing data. With the global economy noticeably turning downward, prospective home buyers may be content to hold off on such a large-scale purchase until conditions improve.
Wrap-Up
For gold and silver, the same factors that contributed to positive performances through the first few weeks of the month are once again making an appearance. Uncertain global economic conditions are persisting and investors simply do not know what to do to protect their wealth. As a result, we are once again seeing safe-haven demand for gold and silver tick upward. With tomorrow’s weekly jobless claims report on the slate, it will be interesting to see if the US economy can output another bright report with regard to employment.
