Posted on March 06, 2017
Gold Spot Price Open: $1,237
Gold Spot Price Close: $1,230
Change in Gold Spot Price: -$7
Silver Spot Price Open: $18.04
Silver Spot Price Close: $17.79
Change in Silver Spot Price: -$0.25
Precious metals did not exactly come out of the gates flying on Monday, as rate hike expectations continue to weigh on spot values. When all was said and done, gold ended up losing around 7 dollars while silver fell to the tune of 25 cents. Platinum and palladium fell too, with platinum the bigger loser of the two, having lost close to 20 dollars.
After a few months of waiting, we might finally be on the receiving end of what Republicans hope will replace Obama’s universal healthcare system. President Trump has long been saying that Obamacare was a massive failure, but has yet to produce anything tangible that will replace it.
There is no clear determination as to what Trump’s plan will look like, or when it will be officially unveiled, but this is a step in the right direction.
The manufacturing sector of the US economy appears to be getting 2017 off to a strong start, seeing as January saw factory orders increase from the month before. When you add in December to this data, factory orders have increased for 2 consecutive months. While this does not seem like a large feat, it shows us that perhaps the US manufacturing sector has finally recovered. Donald Trump will definitely hang his hat on this fact, though it is unclear how attributable to Trump this data is.
According to the US Commerce Department, factory orders in January rose by 1.5% from the month before. Even in December, factory orders were reported as being 1.3% stronger than they were in November. On an annualized basis, factory orders in January came back 5.5% stronger this year than they did last year. It has been quite some time since the US manufacturing sector could be described as strong, and if this positive data continues we might be able to call this a full recovery.
It seems as though we have been talking about this on a daily basis, but the fact of the matter is that strengthening rate hike expectations are continuing to weigh on precious metals. Last week saw the tide really shift, as investors went from not expecting to see rates hiked anytime in the near future, to expecting a rate hike announcement before March is brought to a conclusion.
Whether we are talking about Janet Yellen, William Dudley, or any other member of the Fed, they have all been increasingly hawkish as of late. If the economic data stream this week continues to be as strong as it has been, rate hike expectations will only increase. For gold and silver, this is not such a good thing and does well to limit any and all upside potential.
Keep in mind, too, that the next rate hike will be but one of a possible three expected to take place during this calendar year. The Fed has promised a minimum of 3 rate hikes, and it seems as though they are well on their way to fulfilling this promise.
All things considered, Monday was a fairly light day. There wasn’t much in the way of markets-moving economic data released, and investors instead chose to continue speculating with regard to rate hikes. At this point, we are going to be talking about interest rate hikes seemingly every day up until the FOMC meeting kicks off. As such, gold and silver are not looking too promising in the near-term.