Posted on March 27, 2017
Gold Spot Price Open: $1,252
Gold Spot Price Close: $1,257
Change in Gold Spot Price: +$5
Silver Spot Price Open: $17.91
Silver Spot Price Close: $18.07
Change in Silver Spot Price: +$0.16
Both gold and silver got the week off to a positive start thanks to many of the same factors that have been aiding spot values the past 2+ weeks. When all was said and done on Monday, gold added around 5 dollars while silver added roughly 16 cents. Platinum finished the day mixed, but neither metal really moved too far from where they began the day.
Monday offered up very little in the way of fresh, markets-moving data, and as a result we saw gold and silver continue along the slightly upward trajectory we witnessed for most of last week. If you look at stock indices not only in the US, but around the world as well, you will notice that most of them were in the red Monday, and have been performing poorly for the better part of the last week. A major reason behind this poor performance is what happened to a Republican-led initiative to strike down former US President Obama’s Affordable Care Act. Though the ambition of Paul Ryan and President Trump was that the House of Representatives would strike down the ACA, such did not take place. Instead, by day’s end Friday it was determined that ACA would remain intact, at least for the time being.
You might now be asking yourself, but what does this have to do with stocks? Though there is no simple answer, the fact of the matter is that equities in the US and abroad began gaining value from almost the second Trump stepped into office. The reason for this, according to many, was that Trump was seen not only as someone who is pro-business (AKA good for stocks), he was also seen as someone who can get things done in Washington DC. The failure on the part of Republicans to strike down and ultimately replace Obamacare was seen as a massive failure on the part of President Trump, and as a result we are seeing some serious questions raised with regard to just how effective a president Trump can be. In other words, investors who were gung-ho on specific stocks as a result of Trump taking office are now back-tracking to some extent as Trump is quickly proving that effecting change is not quite as easy as he made it seem.
All of this is playing right into the hands of precious metals spot values, which are now capitalizing on weaker stocks joining forces with a weaker USD. So long as these two asset-classes remain beaten down, things will be looking up for the precious metals market.
Nowadays, the absence of fresh inputs across the global marketplace more often than not means that someone, somewhere will begin talking about what the future holds for US interest rates. That much held true on Monday, as HSBC announced that they are only expecting 2 more rate hikes through the last 3/4s of 2017.
Though this is an upgrade from HSBC’s original projection of just one more rate hike, it falls short of a previously popular belief which held that 3 and possibly even 4 more rate hikes were on the horizon. Of course, many things can change between now and the end of the year, but for the time-being, the current rate hike expectations are playing in precious metals’ favor.
It goes without saying that there was almost no noteworthy economic data brought to the table on Monday. Instead, we saw investors focus on many of the same issues that were being discussed towards the end of last week. I anticipate that the duration of the week will be quite slow, however next week will be a bit more action-packed thanks to the release of month and quarter-end economic data.