Gold Spot Price Open: $1,188
Gold Spot Price Close: $1,189
Change in Gold Spot Price: +$1
Silver Spot Price Open: $16.82
Silver Spot Price Close: $16.73
Change in Silver Spot Price: -$0.09
Precious metals didn’t do much in the way of making gains on Wednesday and traded sideways for a majority of the day. When all was said and done, gold managed to gain about a dollar while silver lost almost ten cents. Platinum and palladium more or less mimicked the price action of gold and silver and did not finish the day too far from where they began it.
US Dollar Preventing Precious Metals Gains
So far this week, precious metals have been either held hostage or completely battered by a stronger US Dollar. Thanks to a number of different global developments, the greenback has taken a turn for the better and has been seen making massive gains against rivals. For the past two days, in fact, the US Dollar hit two consecutive 8-year highs against the Japanese Yen, and against the Euro is making decent gains as well. Today, the Dollar didn’t perform as well against the EU’s prominent currency mostly due to word of progress stemming from Greek debt negotiations.
Despite the first almost half of this year bringing about mostly consistent downbeat economic data from the United States, there are still some people who believe that interest rates will be raised before year’s end. I am having trouble finding out how this belief is once again gaining momentum, but it is said to be coming to the aid of the Dollar in recent days, and is not doing precious metals any favors whatsoever.
Potential Fed Move Eyed
As was discussed in the above, investors are once again growing convinced that an interest rate hike is on the horizon for the United States. Though this belief isn’t necessarily new, it was revived a bit thanks to comments by Fed Chair Janet Yellen last week which alluded that interest rate hikes may very well be coming before year’s end. For gold and silver, this new batch of speculation has taken the momentum away from last week’s rally. Now, the focus turns on both gold and silver in order to see if they will remain in their recently well-defined range, or if we are simply gearing up for a more permanent move lower.
Eli Tesfaye, of Chicago-based RJO Futures, commented on gold’s movement this week by saying, “I think there’s still a little bit of risk getting priced into gold, which is why it’s showing consolidation. There’s not a lot of pressure to sell it and a lot of technical sellers are not going to get aggressive until it starts going below $1,175.” Now all eyes will be on spot values through the remaining few days of this week in order to see if they do continue to edge lower. Even physical demand from Asia has been reported as being generally light in the wake of metals’ move downward on Tuesday. This is highly unusual and does very little in the way of pushing metals in any direction other than downward. As we move forward, expect Fed speculation to pick up as plenty of economic data will begin to trickle in from the end of May, and soon, the end of 2015’s second quarter as well.
Wrap-Up
As the week edges towards a conclusion, there will be a lot of information for investors to consider and digest. For one, we will continue to keep a close eye on Greek debt negotiations as they will likely have a major impact on the movement of global markets, especially currency markets. In addition to that, some further economic data from the US is expected to be released between now and Friday, most notable of which being the weekly jobless claims report which has been upbeat for the past month or so. Another upbeat reading on jobless claims will assuredly only add fuel to the interest rate speculation fire.
