Posted on September 18, 2014
Gold Spot Price Open: $1,236
Gold Spot Price Close: $1,226
Change in Gold Spot Price: -$10
Silver Spot Price Open: $18.79
Silver Spot Price Close: $18.62
Change in Silver Spot Price:-$0.17
Precious metals finished the day having posted losses, but were fortunate to be up from extremely disappointing daily lows. When all was said and done, gold was down by about ten dollars while silver fell by more than 15 cents. Platinum and palladium also trended downwards for almost all of the day.
Though this month’s FOMC meeting officially wrapped up yesterday afternoon, many global investors were unable to digest what the FOMC had to say until the overnight and early morning hours of today. Unfortunately for precious metals, the wider world of investors perceived yesterday’s FOMC statement as being much more hawkish than originally anticipated. Though the committee reiterated that there is still “considerable time” before interest rates are raised, their remarks led investors to believe that perhaps rates will be raised sooner rather than later.
With all of this said, US equities seem to be the real winner in the wake of the FOMC meeting due to the Fed’s reiterating that it will keep rates at their current level for “considerable time” yet. This commitment to low interest rates has investors more interested, at least for the time being, in bullish stock markets as opposed to the safe-haven characteristics offered by precious metals. King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco, stated things simply when he said that the “data says the U.S. economy continues to chug along. Right now the best-looking asset class is equities.”
The US Dollar has bounced around quite a bit in the wake of this week’s meeting, but appears to be holding steady on the whole.
As you read this, the votes stemming from Scotland’s referendum on independence are being sorted and counted. As one of the biggest, most influential votes the United Kingdom has seen in recent years, you can bet we won’t hear any official word regarding the results until things have been checked, confirmed, and then re-checked.
Regardless of what the outcome of the referendum proves to be, there is an overriding belief that the UK economy will be able to handle whatever is thrown at it. The UK economy has been performing well as of late and has seen growth in each of the previous 6 quarters. What’s more, payrolls are at all-time highs and are continuing to grow. The UK has come a long way since the early days of the financial crisis in 2007, and is in a position that it might just be able to survive a Scottish “Yes” vote for independence. Though such a vote would do the British economy no favors, growth the likes of which we have seen from the UK in recent weeks suggests that such a strong economy might still be able to move forward–even having lost one of its major appendages.
As we head into the evening tonight and then into the final day of trading tomorrow, the eyes of the world will descend upon the UK and specifically Scotland. Though there is no real way of determining which way the vote will go, most have confidence that the UK economy will survive regardless.
Looking ahead to the last day of the week, I expect the bulk of investor attention to be placed on the outcome of the Scottish vote on independence. Apart from that, however, I anticipate that the last day of the week will be fairly quiet and subdued.