Posted on March 10, 2017
Gold Spot Price Open: $1,206
Gold Spot Price Close: $1,206
Change in Gold Spot Price: NO CHANGE
Silver Spot Price Open: $17.07
Silver Spot Price Close: $17.02
Change in Silver Spot Price: -$0.05
Precious metals did on Friday what they did all week long, lose value. When all was said and done on Friday, gold ended up finishing even while silver fell by another 5 cents. Platinum and palladium, on the other hand, finished the day mixed, with neither finishing the day too far from where they began it.
It is little secret that the biggest news of the day, and perhaps even the week, was the release of the US Labor Department’s reading on non-farm jobs growth. While the earlier released ADP report beat expectations by a mile, there was never any guarantee that the Labor Department’s report would be equally upbeat. Having said that, the thought process employed by many was that if today’s data did beat expectations, we can almost fully expect to hear a rate hike announcement next week.
Though there is no way of saying if this train of thought is a correct one, we do know that the Labor Department’s report did beat expectations by a good bit. Compared to expectations of roughly 200,000 non-farm jobs having been added to the economy in February, the actual tally showed that about 235,000 jobs were created. This was good enough to ensure precious metals would lose on the day, and really jump-started talks with regard to what to expect from the FOMC next week.
Right now, there are a lot of people who would be shocked if the FOMC does not announce a rate hike. For precious metals, the lack of an announcement would, in all likelihood, shoot spot values back upward. Right now, prices are so beaten down because, for the past two weeks, investors have slowly but surely been pricing in the prospect of a rate hike announcement. If that expectation goes awry, spot values are likely to come roaring back. Of course, nothing is guaranteed in the investing world, so we will just have to wait and see what happens.
It isn’t only the United States that is obsessing over rate hikes, because now Europe has hikes of their own to consider. According to sources close to the European Central Bank, there are some members of the ECB who feel as though it is appropriate to raise rates across the region even before their quantitative easing program is brought to an end. To refresh, Draghi alluded that easy money policies (ie. QE) should be brought to an end soon, but failed to elaborate on just how soon this should happen.
Unlike the prospect of US rate hikes, the ECB rate hike discussion was fairly brief as it did not have a large amount of support. Primarily due to the fact that QE still going on while rates are being hiked is a bit counterintuitive. Still, with that much being said, it is something we will definitely have to think about going forward. In the immediate wake of this news story breaking today, the Euro currency moved upward to a 3-week high versus the USD.
Friday was perhaps the most important day of the week because it brought about what was more than likely the most important data point of the week. Now, as you already know, the attention of the global marketplace will shift to next week’s FOMC meeting. Though there are sure to be a few noteworthy headlines made in the lead-up to the meeting, the FOMC is all investors will be focusing on. Come this time next week, we will know for sure whether rates are going to be hiked again, or if we will have to continue playing the waiting game. For what it’s worth, the majority of investors are expecting the announcement to be made.