Posted on August 21, 2015
Gold Spot Price Open: $1,155
Gold Spot Price Close: $1,160
Change in Gold Spot Price: +$5
Silver Spot Price Open: $15.60
Silver Spot Price Close: $15.36
Change in Silver Spot Price: -$0.24
Gold and silver backed down a bit after recent games to finish out an otherwise upbeat 5-day trading session. When all was said and done, gold gained about 5 dollars on Friday while silver backed down by more than 20 cents after particularly big gains the day prior. Platinum and palladium also backed down on Friday, with palladium being the bigger loser of the two.
According to Markit, the manufacturing sector’s flash PMI for the month of August suggests that this sector of the US economy may be under-preforming. Officially, the Flash PMI for August fell to 52.9, down from a end of July reading of nearly 54. Though any reading above 50 indicates that the given sector is performing well, the downward movement is something that is always going to unnerve investors to some extent. An even more telling statistic is that this is the worst such reading for the manufacturing sector since the Fall of 2013.
A senior economist at Markit commented on today’s flash reading by saying, “With the headline PMI swiftly losing ground after a modest rebound during July, the latest figure now points to the weakest overall pace of manufacturing growth for almost two years.” While this may be so, it is important that we do not forget the fact that the Summer months are typically slow for many areas of the economy, so this is not necessarily the most surprising news.
Fears regarding a Chinese economic slowdown caused stocks to conclude their worst week of the year in less than impressive fashion. Stock indexes have been down almost across the board and the fact that China’s economy can’t seem to get on track definitely isn’t helping things. After hitting record highs in May, the Dow Jones has lost nearly 8% of its value. This is a particularly bad run of form, especially over a time period of less than 4 months.
If investors were worried about the United States’ Flash PMI, they are going to be even more worried about Markit’s reading for China in August. Now, according to today’s data release, China’s manufacturing PMI is closing in on an even 47, down from 47.8 at the end of July. This is the lowest such reading in more than 6.5 years. As we move forward, I anticipate that we will continue to keep a close eye on China’s economy.
For gold and silver, the last 5 days have seen spot values move consistently upward. Gold has made extremely nice gains since the conclusion of last week. Thanks to today’s losses, silver was not able to make such drastic gains, but did finish the week on the positive side of things. As we look ahead to next week it will be interesting to see if precious metals can continue this rally. With so many investors worrying about things like the strength of China’s economy, the timing of interest rate hikes, and recently flailing US stock markets, gold and silver are benefiting from some semblance of safe-haven demand. Whether this will continue through the last full week of August or not remains to be seen.