Gold Spot Price Open: $1,259
Gold Spot Price Close: $1,273
Change in Gold Spot Price: +$14
Silver Spot Price Open: $15.42
Silver Spot Price Close: $15.54
Change in Silver Spot Price: +$0.12
Gold and silver are moving upward in the wake of a European Central Bank meeting that went as expected, but also packed a few surprises. When all was said and done, gold was up by more than ten dollars while silver improved by more than 10 cents. Platinum and palladium were also up on the day, with platinum up by about 4 dollars while palladium gained closer to ten.
ECB Cuts Main Interest Rate, Expands QE
In the lead-up to today’s European Central Bank meeting, investors around the world widely expected to see easy money policies expanded. What they didn’t expect, however, was that the ECB was going to make so many moves all at once. In addition to expanding their monthly bond-buying initiative (also known as Quantitative Easing) by 20 billion euros/month, the region’s bank also cut the main interest rate to 0%, from .5%. Even the main refinancing rate was slashed to 0. As if all this weren’t enough, the ECB went on to announce that interest rates on bank deposits moved from -.3% to -.4%. This negative interest rate is the ECB’s way of encouraging banks to lend money rather than let it sit. In times of economic downturn such as this, letting money sit idle in the bank does little to help fix things. It is also widely believed that, if banks begin to lend more frequently and in larger amounts, inflation levels will move upwards as well—and really that is the ultimate goal.
In the wake of the meeting stock markets around Europe began to tick upwards, as did precious metals. It will be interesting to see, over the course of the rest of this year, just what kind of impact today’s ECB moves will have on European economic growth. Though Quantitative Easing has not been around in Europe for a very long time, the initial analysis shows that QE has done very little to help the ailing EU economy. There are doubts that today’s moves will spur economic growth, but that much remains to be seen.
Weekly Jobless Claims Fall by Nearly 20k
First-time claims for unemployment benefits last week numbered 18,000 fewer than they did the week before. This snaps a 2-week streak of rising claims, and really does well to undo both previous weeks’ poor claims reports.
According to the US Department of Labor, first-time claims for unemployment benefits fell below 260,000 for the second time in little more than a month. Now the goal is, as it always is, to keep that seasonally adjusted average under the 260,000 mark and maybe even beneath 250,000; though that seems a bit ambitious at this juncture. Today’s employment data is being interpreted as being widely upbeat seeing as expectations were for the seasonally adjusted average number of claims to remain in the 270,000 range. In addition to today’s upbeat data, last week’s unemployment claims report was revised to show that 1,000 fewer people than originally reported actually filed for benefits.
The 4-week moving average of weekly jobless claims fell by more than 2,000, and this is just icing on top of an otherwise stellar report.
Wrap-Up
As we look ahead to the final day of the week, I feel safe in saying that most investors will continue to be preoccupied with what the ECB’s decisions today will mean for the future of the European economy. Apart from that, it seems as though Friday will bring us into the weekend quietly. For gold and silver, it will be interesting to see if this week will end up as a positive one or of more profit-taking will see metals heading into the weekend having lost some momentum.
