Posted on September 22, 2014
Gold Spot Price Open: $1,216
Gold Spot Price Close: $1,215
Change in Gold Spot Price: -$1
Silver Spot Price Open: $17.92
Silver Spot Price Close: $17.82
Change in Silver Spot Price:-$0.10
Precious metals ended the day trading closer to even and were up from daily lows, but the market bears are still visibly in control. When all was said and done today, gold dropped about a dollar while silver slid by ten cents. Platinum and palladium ended the day having lost nearly ten dollars each.
Since the conclusion of the Federal Open Market Committee’s latest meeting last Wednesday, the market has been obsessed with the future of interest rates in the United States. Though the Fed did not make any rate changes at last week’s meeting, the wording of the post-meeting statement has led a large number of investors to believe that rate hikes might come sooner than expected. This news only aided the upward movement of US equities and the US Dollar.
The quiet nature of the early parts of this week are shaping up to do precious metals no favors as the interest of investors remains heavily concentrated on equities and currencies. According to Michael Lewis, head commodities researcher at Deutsche Bank, “both (gold and silver) will have problems, given that we’re bullish on the dollar, real interest rates are going up and we think equity markets are still good value and will rise more.” So long as the US economy continues to improve, the market will only grow increasingly convinced that the Fed’s next move will be to raise interest rates. As has been the case for a month or more now, investors are no longer wondering if the Fed will raise rates, but rather when such a move will be made.
Despite the bullish form of most major US stock markets, today was not such a hot day on Wall Street thanks to some downtrodden housing data from the United States. According to the report, which was made public earlier today, sales of previously-owned homes declined in August for the first time in nearly half a year. This news helped metals edge up from daily lows, but does little to change the overall bullish nature of the current market atmosphere.
The USD index was all over the place today but managed to finish the day in just about the same position it was in when things got underway. As you could have probably guessed, the sub-par housing report did the greenback no favors today.
Prior to the opening of US markets today, China’s finance minister surprised investors by announcing that China will not be instituting additional monetary stimulus efforts any time soon. With China’s economy, the second-biggest in the world, currently in the midst of a slump, there has been a lot of speculation from the international investing community with regard to the possibility of further monetary stimulus being executed by China’s central bank. As we found out today, however, China will see no new stimulus measures.
This news was not at all beneficial for precious metals or any other raw commodities.
Looking ahead to the next few days, I expect the attention of the market to remain glued to the progress, or lack thereof, of US stocks. Apart from that, however, there really isn’t all that much on the slate from an economic or geopolitical standpoint. Tensions in Ukraine have been flying under the radar for the past two or more weeks as a ceasefire agreement between pro-Russian rebels and Ukrainian troops appears to still be holding strong.