Posted on August 19, 2015
Gold Spot Price Open: $1,118
Gold Spot Price Close: $1,135
Change in Gold Spot Price: +$17
Silver Spot Price Open: $14.92
Silver Spot Price Close: $15.36
Change in Silver Spot Price: +$0.44
Precious metals made nice treks forward on Wednesday—a day that was full of economic data from the US and elsewhere around the world. When all was said and done, gold managed to gain more than 10 dollars while silver mostly made up for yesterday’s losses by adding somewhere in the neighborhood of 40 cents. Platinum and palladium also made gains today, with both metals having picked up more than 15 dollars.
As soon as markets opened today, precious metals made nice gains after losses on Tuesday. Investors were eager to buy up precious metals in the early morning hours after Tuesday made the market price of physical metals too attractive to pass up. The reason behind gains the past few days is due, at least in part, to the altering of views regarding the hiking of interest rates. Thanks to China’s recent devaluation of the Yuan, many investors have now grown convinced that interest rates may not be risen until December. Up until the past few days, the prevailing belief was that interest rates in the US would be risen in September.
The Fed did not offer up too much in the way of fresh information regarding interest rates and their minutes from last month’s meeting did not move markets all that much. The Fed did, however, take an overall stance that suggests interest rates are likely to be risen sooner rather than later. That said, this isn’t the first time we have heard such words. Though China’s recent moves to devalue their currency have shifted some people’s view regarding interest rates, recent economic data has come back fully positive in recent weeks. With this being the case, I feel comfortable saying that most people are still pointing toward September as the likely time where we will hear definitively that interest rates will be risen.
For gold and silver, the past week or so has been encouraging simply because spot values are creeping upwards. Having said that, however, it is going to take a major change in the thinking of the general investing public for gold and silver to gain any real amount of traction.
Inflation in the US rose during the month of July, but at a slower rate than in most months previous. Officially, the Bureau of Labor Statistics reported that consumer prices in July moved upward by 0.1% on an annualized basis. Consumer prices moved upward thanks to rising costs associated with gasoline and food.
Though we have gone back and forth quite bit in recent days with regard to the timing of interest rate hikes, this data has many once again convinced that September is the time when rates will be risen. Andrew Grantham, senior economist at CIBC Markets, commented on the current situation by saying, “As long as core inflation doesn’t ease from these levels, we continue to expect the Fed to start gradually increasing interest rates at the September meeting.”
It is unclear what the future actually holds for interest rates, but right now I still believe the market believes that hikes are going to take place in September.
The market was awaiting today’s FOMC minutes from July’s meeting with bated breath, the minutes were more of a miss than anything else. Investors were hoping to receive definitive word as to whether rates would be risen in September or not, but the Fed remained as cryptic as ever. While most Fed members expressed positive opinions regarding the state of the US economy, their words were not perceived as meaning that rates are definitely going to be risen at September’s meeting.
As has been the case for the past few weeks, the market’s attention did not stray too far away from what was happening across the US market. I expect that this will remain the case through the next month as speculation regarding interest rate hikes is only going to intensify further.