Posted on March 17, 2017
Gold Spot Price Open: $1,230
Gold Spot Price Close: $1,232
Change in Gold Spot Price: +$2
Silver Spot Price Open: $17.38
Silver Spot Price Close: $17.37
Change in Silver Spot Price: -$0.01
Precious metals continued adding value to close out the week, however Friday’s gains were a bit more subdued than the two previous days’. When all was said and done, gold ended up adding a few dollars while silver tacked on a few pennies before finishing the day down by a single cent. Platinum and palladium were up on the day, with platinum gaining about 7 dollars while palladium added roughly 10.
Perhaps stealing some thunder from the precious metals market, stocks the world over were on the up and up for the most part. In fact, from Wednesday through the end of the day Friday, most major stock indexes in Europe, Asia, and the Americas were rising thanks to the prospect of higher interest rates. As you know, the US Federal Reserve announced a rate hike this week, but they were not the only monetary policy body talking about such a move. In Europe, European Central Bank leaders have recently been tossing the idea of raised interest rates around. With improving economic conditions seeming to take hold, there is a growing feeling that perhaps monetary policy should be normalized, and does not need to be so aggressive.
In all, this is supporting stock markets because it is giving investors reason to believe that the economies in question (especially those in Europe and the US) are showing sustained signs of improvement. With increased investor confidence typically comes elevated equity markets. This is exactly what we have been seeing over the past few weeks, and is something I would not be surprised to see carry through at least the early parts of next week.
From the time the interest rate hike announcement was made earlier this week, precious metals began gaining value lost over the past 3 weeks. As was mentioned earlier, these gains are coming as a result of a less than hawkish Fed. While a rate hike announcement was made, it was expected to be made and therefore came as no surprise. In addition to expecting the rate hike, investors were also anticipating that, in their statement, the Fed would be a bit more hawkish with regard to what the future holds for rate hikes. Instead of promising 3, 4, or even 5 more rate hikes, the Fed was subdued and alluded that further hikes will be assessed based on forthcoming economic data as well as geopolitical happenings.
For the time being, precious metals are working their way back to where they were prior to the 3 weeks of almost consecutive losses. Whether or not spot values can extend beyond those positions remains to be seen. After all, further rate hikes are still expected, so there is only so much ground metals will be able to recover without help from bullish factors elsewhere.
All things considered, this week was jam-packed with economic data and some big monetary policy announcements. Though the rate hike announcement had been expected for weeks, even months, there was always going to be a few holdouts who were skeptical as to whether it would happen or not. Now that interest rate talk is behind us, we can begin focusing on more pressing issues, many of which are happening across the European continent. In the coming weeks, apart from the region’s monetary policies, we will be focusing on a few different elections that might have massive implications not only for the Eurozone economy, but also for the European Union as we know it today. For precious metals, this means that some safe-haven demand might once again make an appearance in the near future.