Posted on September 19, 2014
Gold Spot Price Open: $1,226
Gold Spot Price Close: $1,216
Change in Gold Spot Price: -$10
Silver Spot Price Open: $18.60
Silver Spot Price Close: $17.96
Change in Silver Spot Price:-$0.64
Precious metals partook in a pretty drastic slide downward to end what is a third consecutive week of losses. When all was said and done on Friday, gold lost about ten dollars while silver declined by a whopping 64 cents. Platinum and palladium trended downward again today as well, with both metals having lost around 15 dollars.
Since the conclusion of the FOMC meeting a few days ago, the USD index has been on a constant march upward. The greenback is not only being given support from a consistently weaker Euro, but also from the belief that the Federal Reserve will lay out the blueprints for a rate hike sooner than originally anticipated. Though the FOMC announced that no rate changes would be made at this week’s meeting, investors perceived the wording of the FOMC’s post-meeting statement as meaning that rates might be bumped upward sooner rather than later.
For precious metals, a stronger US Dollar will almost always translate into heavy selling pressure. That is exactly what is happening now. In addition to the pressure stemming from a stronger greenback, the spot values of gold and silver are ailing simply because the market is seen focusing more readily on US equities than any other investment class. With all of the market’s attention being directed towards the USD and US equities, there is little room for precious metals to make any strides forward. As you could have probably guessed, the last few days of the week have also been extremely beneficial for major US stock indexes.
After almost a month of consecutive losses on the part of precious metals, it is only right that we take a step back and analyze where gold and silver might be heading over the course of the next few months. With spot gold now hovering around an 8-month low, the simplest answer is that it seems like metals will continue to edge downward. Mike McGlone, of ETF Securities, made it clear that “the environment is still bad for metals. The main thing that hasn’t changed is the number one asset class is drawing capital – that’s equities. Until that stops,” metals will be on the receiving end of a lot of selling pressure. There is no way of telling where the metals market will head in the coming days, weeks, and months, but preliminary indications are anything but promising.
When things were wrapping up on Thursday, there was still no real word on the results of the Scottish referendum on independence. As evening turned to night (in the US), however, results began to trickle in slowly and began painting a picture of a divided Scotland, but a Scotland that was leaning towards remaining part of the UK. By the time US markets opened today, it was made clear that the referendum had failed; as 55% of those voting chose to remain part of the UK, while 45% voted in favor of independence.
This news prompted the British Pound to regain some of the ground it lost through the early parts of this week, and boosted the world’s confidence in the UK economy–of which has been performing extremely well in recent months.
Looking ahead to next week, the one thing we do know is that it is shaping up to be a good bit quieter than this week was. There simply isn’t a plethora of economic data on the slate, and because of that, the continued focus of investors will more than likely be on currency and equity markets in the US and abroad. It will be intriguing to see if spot gold and silver can bounce back from this week’s late losses, or if the downward trend, now in its fourth week, will continue to pile on the pressure.