Gold Spot Price Open: $1,260
Gold Spot Price Close: $1,259
Change in Gold Spot Price: -$1
Silver Spot Price Open: $18.50
Silver Spot Price Close: $18.39
Change in Silver Spot Price: -$0.11
Precious metals are now facing pressure thanks to changing interest rate hike expectations in recent days. When all was said and done on Wednesday, gold ended up conceding about 1 dollar while silver lost in the neighborhood of 10 cents. Platinum and palladium finished the day mixed, with platinum losing a few dollars while palladium added a few.
Fed Grows Increasingly Hawkish
Even as President Trump’s first address to Congress took center stage, investors quickly began turning their focus to comments made by influential members of the Federal Reserve. First up was William Dudley, who is chair of the New York Federal Reserve bank as well as one of the most closely-followed central bankers in the country. Recently, he made it clear that, as economic conditions continue to improve, he sees no need to hold off on hiking rates even further.
Echoing these statements was chair of the San Francisco Federal Reserve, John Williams, when he said that he sees “no need to delay” the hiking of rates. Being that many investors, and especially those involved in the precious metals trade, have not been expecting rate hikes anytime soon, the growing belief that they will hiked will more than likely weigh on spot values.
Now, the marketplace has a prepared speech on the part of Janet Yellen to look forward to, and that is going to take place on Friday. If the tone of Yellen’s statements allude that a rate hike is going to be announced at the next FOMC meeting, you can expect that precious metals may move lower.
Trump Fails to Elaborate on Fiscal Policy
Trump’s first address to Congress was met with a lot of anticipation this week, but those that anxiously awaited the events were largely disappointed. Hoping to hear President Trump elaborate more on his fiscal policy, investors and citizens alike were let down as he failed to provide many key details. He reiterated that there will be tax reform and investment in infrastructure, but did not explain how it will be paid for nor how much it is expected to cost, in total.
Consumer Spending Decreases
Though declining consumer spending might be viewed as a bad thing, the data released today pointed to the US economy, as a whole, performing well so far through the first quarter of 2017. According to the Commerce Department, consumer spending during the month of January rose by .2% against an unrevised .5% increase in December of 2016.
Economists expected to see consumer spending rise by .3%, so while the miss was not large, it was still a miss. January also saw the largest single-month inflation increase in more than 4 years, which helps explain the smaller growth in consumer spending. While consumer spending is falling, consumer confidence is the highest it has been in more than 15 years. Ever since President Trump was elected, people are convinced that the US economy will continue to grow and the lives of citizens, across the board, will improve noticeably.
Wrap-Up
Wednesday brought with it another batch of US economic data, and yet again we are seeing investors digest what is positive news overall. Coming with this are expectations that the Fed may move more quickly on hiking interest rates. As this expectations gains momentum, precious metals may face further pressure. As we close out the week, we are going to receive more month-end economic data as well as some weekly employment data.
