Gold Spot Price Open: $1,306
Gold Spot Price Close: $1,295
Change in Gold Spot Price: -$11
Silver Spot Price Open: $20.94
Silver Spot Price Close: $20.75
Change in Silver Spot Price: -$0.19
Precious metals continued to concede value on Tuesday, mostly thanks to some more hawkish statements made by Fed chair Janet Yellen. When all was said and done, gold lost close to eleven dollars while silver’s losses were closer to twenty cents. Platinum and palladium trended lower for a majority of the day as well and are looking significantly weaker now than they did a week ago.
Janet Yellen Makes Hawkish Remarks Regarding Interest Rates
Coming into this week, the focal point of the market’s attention was on the semi-annual addresses to Congress Janet Yellen was scheduled to make today and tomorrow. In her address today, Ms. Yellen began by reiterating the Fed’s intention to do away with Quantitative Easing by the time the FOMC meets in October. These remarks did not come as much of a surprise and had very little affect on the price action of precious metals.
Shortly thereafter, the Fed chair went on to say that continued improvement in the US employment sector may provide impetus for the Fed to think about raising interest rates. For now, however, interest rates are expected to remain at current levels.
When the day was through, it was clear that investors interpreted Yellen’s comments as saying that rates will be raised perhaps sooner than expected. As George Gero of RBC Capital put it, “Yellen was a little bit more hawkish than expected. That signals higher rates sooner rather than later. And that’s anti-inflationary, and presents competition for gold.” Yellen’s remarks gave US Treasuries a significant boost as 10-year yields fell to their lowest point in about a month and a half.
European, US Stocks Continue To Flounder
For a sixth time in eight trading sessions, European equities posted some noticeable losses, fueled by weaker technology and household-goods shares. Not helping European equities at all was the fact that Banco Espirito Santa SA saw its shares fall to lows not experienced since the early 1990s.
US stock indexes, with the exception of the Dow, traded downwards after US economic data came back a bit weaker than expected. Among the sub-par data was a revised US retails sales report from June. The revised figures showed that June retail sales rose by .2% as opposed to the previously recorded .5% increase. Preliminary expectations from economists who were polled by Bloomberg held that retail sales were likely to increase by .6%.
By day’s end, the US Dollar had made significant gains against both the euro currency and the yen.
Precious Metals Feeling More Pressure
Precious metals looked as though they were recovering from yesterday’s losses nicely in the early morning hours, but Ms. Yellen’s remarks changed that quickly. Now, after a day of follow-through selling, there are growing worries that precious metals may continue to trend downwards over the course of the next few days and weeks. For this reason, we will continue to keep a close eye on price movement over the next two trading sessions as it will undoubtedly have some sort of impact on the long-term outlook on precious metals.
Wrap-Up
Today’s hawkish statements made by Janet Yellen will continue to be analyzed by investors across the world, but it is generally agreed that interest rates may be risen sooner than originally anticipated. Ms. Yellen has yet another Congressional address tomorrow, but I am expecting that her statements will echo those made today.
Israel continued its bombardment of the Gaza Strip today despite talks of a ceasefire. This situation, albeit on the back-burner of the marketplace’s attention at present, will continue to be somewhat important to investors.
