Posted on September 24, 2014
Gold Spot Price Open: $1,221
Gold Spot Price Close: $1,216
Change in Gold Spot Price: -$5
Silver Spot Price Open: $17.84
Silver Spot Price Close: $17.77
Change in Silver Spot Price:-$0.07
Precious metals maintained their bearish posture into Wednesday as spot values traded sideways to slightly lower for almost the entire day. When all was said and done, gold lost roughly 5 dollars while silver declined by nearly ten cents. Platinum and palladium had mixed Wednesdays as platinum lost more than ten dollars while palladium traded even to slightly higher.
Only a few days ago, I was here reporting on an existing home sales report from the US that not only showed negative growth for the first time in 5 months, but also fell far short of expectations. Today, however, an entirely new outlook on the US economy, and specifically the housing market, developed as a new home sales report came back far better than anyone had anticipated. According to the report, new home sales in August reached their highest point in more than half of a decade.
This good news from the US housing market more than outdid Monday’s poor data and resulted in both the US Dollar and US equities making solid gains today. The USD Index surged to a near 12-month high during the middle of the day and was able to hang on to most of those gains by the time markets closed. Philadelphia Trust Company’s Richard Sichel commented on today’s market activity when he said, “We had three down days in a row, but the size of the home sales increase was a surprise. Improved confidence and stocks being cheaper than they were a few days ago prompted some buying. Stock performance this year has been good because dips haven’t lasted very long.”
Despite measures taken in recent months by the ECB aimed at improving the flailing EU economy, things seem to be staying the same, if not getting worse. Just today, Germany’s IFO business confidence survey was released and came back far weaker than in previous months, as well as far weaker than expected. Compared to an expected IFO reading of 105.8, today’s report showed a reading of just 104.7–the lowest such reading since April of 2013.
As a leading EU economy, investors from around the world look to the German economy as an indication of the overall strength of the wider EU economy. Right now, however, the current standing of the German economy is such that worries with regard to another EU recession are beginning to circulate once more. As a result of all this, the market is fully expecting EU monetary policy to remain as accomodative as ever until significant signs of improvement are made.
According to another, unrelated report from Europe, the World Bank stated that Russia’s economic growth will suffer during the coming months as a direct result of recently imposed sanctions. With that said, the report also noted that despite all of this, Russia’s economic growth may still afford it the ability to avoid a recession in the coming years.
As we collectively look ahead to the last few days of the week, I anticipate that things will remain just as quiet as they have been through the first three trading sessions. There is only a sparse quantity of economic data set to be released, and much of it is likely not going to have much of an impact on the movement of precious metals spot values.
The United States’ involvement in Syria received a lot of attention on Tuesday, but today it was evident that investor attention had faded considerably.