Gold Spot Price Open: $1,105
Gold Spot Price Close: $1,123
Change in Gold Spot Price: +$18
Silver Spot Price Open: $14.41
Silver Spot Price Close: $14.97
Change in Silver Spot Price: +$0.56
Precious metals made nice strides forward on Wednesday ahead of what many are thinking will be a Thursday announcement that interest rate hikes will be pushed back. When all was said and done, gold’s gains edged closer to twenty cents while silver appreciated by more than 50 cents. Platinum and palladium moved upward as well, but platinum was the bigger gainer of the two, having added more than ten dollars.
European Equities Move Forward on Rate Hike Outlook
For a second consecutive day, European equities moved forward thanks to an increasing number of bets that the Fed will not raise interest rates this month. The Fed kicked off their monthly policy meeting today and is expected to wrap it up sometime tomorrow afternoon. Despite all the speculation that has gone on over the course of the past few months, it seems as though investors are coming to terms with the fact that rates may not be changed this week. Being that tomorrow’s post-meeting Fed statement will be made after European markets close, investors are making their moves early.
Providing additional relief for European equities was the fact that China’s Shanghai Index gained more than 4.5% on the day; its biggest single day trek forward since the end of August. Though we did see gains today, losses of more than 3% on Tuesday only serve to highlight the current level of volatility across the Chinese market. Moving forward, we are going to continue keeping an eye on China as it is still far from figuring out its economic and financial issues.
Crude Oil Surge Helps Metals
Not only is the fact that most people think interest rates will be kept at their current level keeping spot values from declining, but so too is the appreciating value of crude oil. Crude oil prices moved forward at a nice pace on Wednesday after a report from the United States indicated that inventories of barrels of crude oil decreased by more than 2 million despite expectations for an increase of more than 1 million barrels. As has been the case in recent week, the spot values of gold and silver are following closely in line with the movement of crude oil, and today that has forced the value of precious metals upward.
Despite gold’s gains today, the metal is still continuing to hover near a one-month low thanks to a general lack of demand. Should the Fed actually refrain from announcing rate hikes tomorrow, we may very well see precious metals spot values take another move upward. That much, however, remains to be seen.
In an unrelated yet still relevant report from the United States this week, homebuilder confidence as reported by the National Association of Home Builders is continuing to be on the rise through the early parts of September. Americans are generally more comfortable with their finances and, more importantly, their financial future, so big-ticket items like homes are being purchased more frequently now than they have been in the past few years. This is a trend most would like to see continue as increasing numbers of houses being purchased is most often a sign of an improving (see: thriving) economy.
Wrap-Up
As has been the case all week, the main focus for investors will be tomorrow’s FOMC meeting which is expected to wrap up sometime in the mid-afternoon. When the post-meeting statement is delivered, the world will be watching, but I do not think we will be given anything in the way of groundbreaking news. There are plenty who still believe a rate hike announcement is coming tomorrow, but there are plenty of others who see that as being a near impossibility.