Posted on July 10, 2014
Gold Spot Price Open: $1,323
Gold Spot Price Close: $1,336
Change in Gold Spot Price: +$13
Silver Spot Price Open: $21.10
Silver Spot Price Close: $21.49
Change in Silver Spot Price: +$0.39
Gold and silver spot values improved dramatically today amid increased risk aversion coming as a result of some poor economic data from both China and Europe. When all was said and done, gold picked up roughly 13 dollars while silver added gains of around 40 cents. Platinum and palladium maintained their elevated positions, but traded sideways for a majority of the day.
US and European equity markets were seen losing a lot of value shortly after US markets opened today. While most stock indexes pared early day losses by the time markets closed, it was still a negative day across the board for most equity markets. Fueling these massive sell-offs were a few downtrodden EU economic reports, including one which showed that Italian industrial production fell by more than 1% in May. It was also reported that EU housing sales fell by .3% on an annualized basis through the first quarter of 2014.
Weak economic data from China didn’t do world equities any favors either, as it was reported that Chinese exports in June increased by only little more than 7%. Expectations were that this number would be closer, if not more than, +10%.
As a result of all this risk aversion, the US Dollar, US treasuries, gold, and silver all saw massive upward price shifts. In fact, the USD Index, which measures the US Dollar against a basket of 6 other currencies, improved by .2% today alone.
Israel continued its air and rocket offensive on the Gaza Strip today, and the investing world continued to keep a close eye on matters there. With all this violence in the Middle East, many are beginning to fear that things will escalate beyond a mere batch of regional conflicts. This small but growing fear has been fueling increased safe-haven demand for precious metals over the last few days.
Officially, it is being reported that production of platinum in South Africa has fallen by 49% on an annualized basis thanks to the months long strikes that occurred at 3 of the nation’s largest mines. The strikes are just about done and dusted, but fears with regard to supply of the metal are causing a spike in demand exhibited perfectly by recently rising spot values. Similar worries surround the upcoming supply of palladium from both South Africa and Russia.
Currently, palladium is sitting on gains of more than 20% thus far this year while platinum is up by about 8%. Scott Carter, CEO of Lear Capital, described the currently steady rise in the value of platinum and palladium as, “a perfect bullish story with worries about supplies increasing and demand remaining very buoyant.”
As we head into the last day of the week, it will be interesting to see if continued risk aversion helps precious metals retain their lofty positions, or if profit-taking after recent gains will result in downward price movement. With few noteworthy pieces of economic data on the slate for tomorrow, investor interest will likely remain fixated on EU and US stock indexes as well as the ongoing violence in Gaza.