Posted on March 14, 2017
Gold Spot Price Open: $1,206
Gold Spot Price Close: $1,207
Change in Gold Spot Price: +$1
Silver Spot Price Open: $17.03
Silver Spot Price Close: $16.85
Change in Silver Spot Price: -$0.18
Gold and silver did not really extend their losses by too much, but did not do much in the way of adding value either. When all was said and done, gold ended up picking up about 5 dollars while silver actually lost a little more than 15 cents. Platinum ended the day having lost about 3 dollars while palladium fell by nearly 15.
The economic data stream is gearing up to be lighter this week than it has in previous weeks, but it has not dried up altogether. To open the day on Tuesday, investors and market watchers were greeted with the Labor Department’s latest Producer Price Index reading. In the lead-up to this report’s release, most experts had anticipated that February’s PPI would see a seasonally-adjusted .1% rise. The actual data showed that February’s PPI actually rose by .3%. Despite this better than anticipated data, gold managed to hold on strong and not lose much value at all on Tuesday.
Producer prices not including food, energy, and services—all of which are determined to be quite volatile—also rose by .3%. This is the largest single-month increase we have seen since last April. According to Royce Mendes of CIBC Economics, “Unlike today’s weather, producer prices came in hotter than expected. Energy prices contributed to the headline increase, but much less so than in the prior two months. Core prices were also a touch firmer than the consensus was looking for at 0.3% on the month, although the annual rate remains fairly contained at 1.5%….All told, this was a firmer-than-expected reading, but markets will be waiting for tomorrow’s consumer price data for any indications on underlying inflation.”
The FOMC may have just kicked off their 2-day meeting today, but investors are already reacting to what will—or possibly will not—be announced in the meeting’s wake tomorrow. Today, we are seeing some increased interest in precious metals on the part of investors who are betting that the FOMC will not make a rate hike announcement tomorrow. Thanks to the rate hike already having been priced into the precious metals market, the absence of an announcement tomorrow might drive precious metals upward.
Despite this, the overriding expectation on the part of investors is that tomorrow will bring with it an announcement that interest rates will be risen by .25%. With the rate hike announcement having already been priced in, investors will also be picking apart the Fed’s statement in search of clues as to what the future holds. Only a few months ago most people were unsure how many rate hikes we would see this year, and now we are hearing some folks expect 3+ total rate hikes before the year is through. All of this remains to be seen, but tomorrow will see the next batch of investor speculation kick off.
As most people expected, Tuesday proved to be a very quiet day across the global marketplace, but especially in the US. A large snowstorm attacking the Eastern seaboard meant for a cancelation of many activities from Washington DC up through Boston. Apart from the spattering of economic data, there really wasn’t anything in the way of fresh news to offer. Of course, that much will change tomorrow as the undivided attention of the marketplace will be placed on the FOMC meeting and accompanying statement.