Gold Spot Price Open: $1,136
Gold Spot Price Close: $1,142
Change in Gold Spot Price: +$6
Silver Spot Price Open: $14.70
Silver Spot Price Close: $14.67
Change in Silver Spot Price: -$0.03
Precious metals posted mixed results on Tuesday amid some strange global market conditions. When all was said and done, gold managed to gain about 6 dollars while silver lost somewhere in the neighborhood of 3 cents. Platinum fell on the day by about 3 dollars while palladium lost more than 20 dollars.
Global Equities Sell Off Again
Today saw global equities sell-off on some more downbeat economic data from China. Officially, before US markets even opened today it was announced that China’s official PMI came back at 49.7–which is the lowest such reading we have seen there in a while. In fact, it has been more than 3 years since China has seen a PMI reading so low and this reading is unnerving because any reading less than 50 suggests that the economy in question is contracting. Stocks in the US and China sold off at a rapid rate during the early parts of the day, but China’s Shanghai Index was able to finish only down 1%–a figure that is much better than the daily low.
Now that we have entered the month of September, it will be interesting to see what happens. Our focus remains on the Chinese economy, and this focus is only making talks regarding interest rate hikes in the US intensify. The latest outlook from the Fed, though very hard to decipher, is one that suggests interest rate hikes may be held off until later in the year or perhaps next year. Still, with that being said, there is still a possibility that we see rates raised at this month’s FOMC meeting.
Risk-Aversion Ticks Up, Supports Metals
Though closing figures may suggest otherwise, today was an upbeat day for gold and silver thanks to a lot of risk aversion on the part of global investors. More downbeat economic data from China had investors the world over concerned about what the future holds, which in turn caused them to ditch some investments that they see as being inherently risky. Thanks to this, the US Dollar had a poor day as investors flocked to currencies like the yen and euro to safeguard themselves against the uncertain marketplace we are currently apart of.
According to a lead strategists at Nomura, “Concerns about China are a key drive in currency markets and the PMIs were weaker and not good for overall risk sentiment.” As we head deeper into this week I imagine that we will see more economic data from China, though I am of the opinion that it will likely be negative in nature. For gold and silver, it is unclear what the rest of the week holds. For now, risk aversion is making the market’s interest in precious metals grow, but like we saw a few weeks ago this interest may be short-lived.
Wrap-Up
Today was an interesting day, but as far as the last few weeks are concerned it is nothing out of the ordinary. The market’s focus remains on China’s struggles, which is something that is only making September interest rate hikes look increasingly less likely. I imagine we will be dealt a bit more economic data from the US and China before the week is through, but what that data has to say is a big mystery. Interest rate talks will persist, but with such little information being dealt from the Fed it is going to be tough to gain much of any insight.
