Gold Spot Price Open: $1,219
Gold Spot Price Close: $1,215
Change in Gold Spot Price: -$4
Silver Spot Price Open: $16.05
Silver Spot Price Close: $15.94
Change in Silver Spot Price: -$0.11
Precious metals continued to decline on Wednesday as many of the same factors continued to weigh on spot values. When all was said and done, gold lost close to ten dollars while silver lost close to another 10 cents. Platinum and palladium finished the day mixed, however neither metal ended the day too far from where it began the day.
OECD Downgrades Expected US Economic Growth
For much of the past 2 weeks, investors have been on the receiving end of nothing but upbeat news regarding the US economy. This is especially indicated by the fact that the Federal Reserve has alluded that they intend on hiking interest rates before the end of the month. On Wednesday, however, the stream of upbeat US economic data was brought to an abrupt halt. This is the case thanks to a report by the Organization for Economic Cooperation and Development which, once again, downgraded US economic growth expectations for this year.
Now, the 2016 growth expectation has fallen to 1.8%. This may not seem so bad, but when you consider that initial forecasts from back in 2014 were calling for nearly 2.5% annual growth, you can see how things have degraded over the past two years. In February, the OECD downgraded its forecast to an even 2%, and today we saw that number fall even further.
In an official statement, the OECD said, “GDP is projected to resume its moderate growth trajectory over the remainder of 2016 and in 2017 as transitory downward pressures on domestic demand and net exports play out. Exports are also projected to strengthen as the drag from previous dollar appreciation wanes and export markets pick up.”
Through an initial assessment, it does not seem as though the OECD’s downgrading of growth expectations had any real impact on interest rate expectations. With that being said, we will continue to keep a close eye on the market and how investors are reacting.
Dollar Declines As Japan Delays Sales-Tax Hikes
In a bit of unexpected news delivered on Wednesday, Japanese PM Shinzo Abe announced that he would be delaying a planned sales-tax hike by more than 2 years. This ended up giving the Yen a boost and at the same time pushed the Dollar downward. The Dollar has been strong for quite some time, so today’s losses are a bit surprising and unexpected. Still, even with the greenback moving downward today, the overall outlook on the US economy is positive, or at least positive enough to warrant an overriding belief that interest rates will still be hiked before month’s end.
Investors did expect that the sales-tax hike would be delayed, but 2.5 years was a bit longer than even the most liberal of expectations. In addition to delaying a sales-tax hike, it is widely agreed upon that quantitative easing measures will be continued and that deficit spending will occur right alongside this plan. Going forward, we will continue to keep a close eye on Japan because its monetary policy directly influences the way in which investors around the world feel and think.
Wrap-Up
All in all, Wednesday was a relatively slow day across the global marketplace. Other than the OECD news, investors did not have much fresh fundamental data to reflect upon. As we look ahead to the last two days of this abbreviated week, the one piece of information that sticks out more than others is the weekly jobless claims report. This report will be closely eyed from now until the Fed holds their next policy meeting.
