Posted on June 04, 2013
Gold Spot Price Open: $1,414
Gold Spot Price Close: $1,399
Change in Gold Spot Price:-$15
Silver Spot Price Open: $22.82
Silver Spot Price Close: $22.52
Change in Silver Spot Price:-$0.30
Both gold and silver did away with a majority of yesterday’s gains on Tuesday as things looked bleak from the start of trading. Gold lost about 15 dollars on the day while silver’s losses rang to the tune of about 30 cents. This is an especially disappointing day because gold, once again, dropped below $1,400; even if only slightly.
There were two factors that put some heavy downward pressure on gold and silver, the first of which was a stronger US Dollar. Yesterday we saw the USD hit four year lows, so it should not be surprising the greenback surged forward as investors were looking to short-cover on Tuesday. The second factor that helped push precious metals in a downward direction was Stocks in Japan finally having a good day. Yesterday saw the Nikkei Index in Japan take yet another large hit, but Japanese stocks were able to bounce back by a fair margin on Tuesday. Despite Japanese stocks having a better outlook on Tuesday, Chinese stocks were still trading down as the mixed-bag of economic news which was released last weekend still loomed on investors’ minds.
The Organization for Economic Cooperation and Development reported that developed nations of the world saw the Consumer Price Index rise about 1.3% in April, compared to a 1.6% annual increase this past March. This mere 1.3% CPI increase in April was the smallest such increase in inflation in nearly four years. Though you may be thinking that any inflationary increase is negative, most heads of central banks around the world will be in agreement that any annual increase under 2% is negligible.
This news is expected to prompt leaders of world central banks to grow more confident in their easy money policies that seem to abundant today. Though easy money cannot continue forever, this OECD report will keep it alive at least for the time being.
Additionally, even though inflation across the world’s developed countries is at historic lows, do not expect the US and the Federal Reserve to change their stance on Quantitative Easing. The US economy is performing at a level where such easy money policies are not needed, and thus QE is expected to be wound down sometime this summer or shortly thereafter.