Gold Spot Price Open: $1,251
Gold Spot Price Close: $1,237
Change in Gold Spot Price: -$14
Silver Spot Price Open: $18.51
Silver Spot Price Close: $17.77
Change in Silver Spot Price: -$0.74
Precious metals lost again on Thursday as the prospect of a March rate hikes grows increasingly realistic. When all was said and done, gold lost about 14 dollars while silver conceded more than 70 cents to fall below the $18/ounce threshold. Platinum lost more than 20 dollars while Palladium conceded only about 5.
Rate Hike Expectations Boost Dollar, Weigh on Metals
For yet another day, we are witnessing a global marketplace that is growing increasingly convinced that a rate hike announcement might be made at the upcoming March FOMC meeting. After commentary from high-ranking Fed members earlier this week, in conjunction with improving economic data, investors have gone from thinking a March rate hike is highly unlikely to now being convinced that it will, in fact, happen.
The most recent batch of rate hike commentary came from the Governor of the Federal Reserve, Lael Brainard, when on Wednesday he said that it would be appropriate to soon raise rates given improving economic conditions. This now makes at least 4 different members of the Fed who have recently, in so many words, made it very clear that they support the prospect of raising rates sooner rather than later. This is a massive change of opinion, seeing as only a few weeks ago most people were not expecting to see interest rates hiked until the Summer.
Weekly Jobless Claims Fall to 44-Year Low
According to the US Department of Labor, last week saw first-time claims for unemployment benefits fall by 19,000 from the week before. This brought the seasonally-adjusted average down to just 223,000. Considering expectations were for claims to rise above 240,000, it is easy to see why this data boosted the greenback.
Though the weekly jobless claims report is not the biggest nor most important piece of data, it does reinforce the belief that the US Economy is continuing to improve in most every way. As such, it goes without saying that the expectation that rates will be hiked is only going to grow. For precious metals, this is not such a good thing. The reason for this is due to the fact that higher rates increase the opportunity cost of holding precious metals in lieu of other investments. In layman’s terms, higher rates make stock market, and interest-bearing investments much more valuable than safe-haven metals.
European Inflation Hits 4-Year High
In a bit of good news for Europe, inflation across the region moved to its best rate in more than 4 years.
According to Eurostat, annual inflation has risen to 2% during February, improving from January’s 1.8% reading. The European Central Bank has been calling for the region’s inflation to be at or just below 2%, and this is the first time that has happened since the very early running of 2013. Ever since that point in time, the Eurozone economy has been trying to claw back to a sense of normalcy. While hopefuls will point to this batch of inflation data as Europe showing some marked signs of recovery
Wrap-Up
Thursday was, in many ways, a lot like Wednesday in that it didn’t bring about a lot in the way of fresh economic data, but saw rate hike expectations continue to increase. As we head into the final day of the week, it will be interesting to see if precious metals can bounce back from midweek losses, or if the losses will simply continue to mount.
