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    JM Bullion Gold and Silver Market Update (8/16/16)

    Gold Spot Price Open: $1,343

    Gold Spot Price Close: $1,348

    Change in Gold Spot Price: +$5

    Silver Spot Price Open: $19.94

    Silver Spot Price Close: $19.71

    Change in Silver Spot Price: -$0.23

    Precious metals finished the day mixed on Tuesday amid market conditions that have remained mostly constant since last week. When all was said and done, gold gained about 5 dollars while silver lost more than 20 cents. Platinum moved slightly forward and palladium bounced back on Tuesday by picking up about 10 dollars on the day.

    Slumping USD Index Supports Gold

    Gold’s spot value was given a bit of a boost on Tuesday thanks to a greenback that slumped and hit multi-week lows overnight. Officially, the USD Index hit a 7-week low during premarket hours.
    The reasoning behind the Dollar’s poor performance is due to a study sanctioned by the Fed which claims that the United States’ target inflation may be boosted at some point in the near future. This is such big news for both currency and precious metals markets because the inflation target for the US being raised would mean that interest rates can stay lower for a longer period of time. If you have been following the interest rate discussion for any amount of time, you are likely more than well-aware of the fact that higher interest rates are not so great for precious metals. This is so because higher interest rates typically accompany economies that are calm and growing at a nice pace. Gold, silver, and all other precious metals, however, tend to thrive in environments that abound in uncertainty.

    With this report coming from the Fed, you can bet that all eyes will be on the release of the minutes from the FOMC’s most recent meeting. Being that this past meeting was mostly lackluster and resulted in no changes to policy, the minutes will be hawked over nonetheless.

    Crude Oil Still Moving Higher

    Hurting precious metals’ ability to move forward today was the fact that crude oil continues to gain some ground. Ever since Saudi Arabia publicly stated that they are willing to take steps to stabilize the crude oil market, investors have been buying-in and it is showing in terms of spot values that are constantly moving higher. Though the gains recorded each day have so far not even come close to denting the accumulation of losses we have seen this year, it is a start.

    Some Light US Economic Data Dealt

    According to the US Department of Labor, July’s consumer price Index (CPI) was unchanged from June. Despite a .2% rise in June, most experts were anticipating that today’s data would show little to no movement during July.

    As far as annual inflation is concerned, that number moved from .9% to .8% from June to July. Core inflation, which includes everything except for food and energy prices due to their volatility, rose .1% last month and .2% the month before. Economists were expecting July’s core inflation rise to match that of June’s, so this piece of data came as a surprise of sorts.

    Still, core inflation sits at 2.2%, which is beyond the Fed’s target of an even 2%. Now that things have come full circle, it might make a little more sense why the Fed may opt to increase its target inflation level. With that being said, however, it is important to remember that the data released today is not necessarily the Fed’s go-to when it comes to the prospect of altering its target level of inflation. Still, even if the Fed does not move to raise its inflation target, today’s data indicates that there is little to no rush as far as raising interest rates are concerned, and that is good news for metals.

    Wrap-Up

    As far as mid-August days are concerned, today was fairly busy. In the grand scheme of things, however, there really wasn’t much going on. Come tomorrow, the focus of investors will be on the FOMC minutes even though very few people are expecting anything in the way of fresh news to emerge from them.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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