Posted on September 26, 2014
Gold Spot Price Open: $1,220
Gold Spot Price Close: $1,218
Change in Gold Spot Price: -$2
Silver Spot Price Open: $17.55
Silver Spot Price Close: $17.70
Change in Silver Spot Price: +$0.15
Precious metals experienced mixed results to close out the week on Friday, but were, for the most part, continuing to trend downward. When all was said and done, gold lost about two dollars while silver managed to add about 15 cents. Platinum and palladium trended downward for a majority of the day and also had forgettable 5-day trading sessions.
According to the US Commerce Department, which raised its US GDP estimation today, the US economy grew by nearly 5% on an annualized basis during this year’s second quarter. The near-5% growth was the most significant gain exhibited by the US economy in more than 2 years, something that also boosted the long-term outlook on the United States economic system. Though many different market sectors contributed to the gains made by the US economy during this year’s second quarter, today’s data indicated that US businesses are spending more readily and exports are growing at a fast rate.
The GDP revisions showed an uptick in all categories; the one exception being consumer spending. With that said, however, the original forecast on consumer spending was already positive, so it was asking a lot for that figure to be revised upward. With this year’s second quarter emitting such upbeat results, all eyes are turning to the 3rd quarter,which has seen the US economy perform fairly strongly thus far. Unfortunately for gold and silver, the revised GDP report had a somewhat negative impact on spot values.
The US Dollar continued to perform well today and held near a 4-year high against a basket of currencies, including the Euro. Fueled by today’s upbeat second-quarter GDP revision, the Dollar is looking stronger than ever. In fact, this week marks the 11th consecutive week in which the USD added value–a feat that has not happened in more than 40 years.
Neil Mellor, strategist at London-based New York Mellon commented on the current progress of the Dollar by saying, “It’s Friday and so we may see some consolidation, but in general the dollar has broken through a number of long-term levels, so there’s scope for us to go further before we meet much resistance. Against the euro we have a forecast in the low $1.20s for a year’s time, but the way things are going we could get there fairly quickly.” So long as the European Central Bank continues to loosen its monetary policies, the sky is the limit for the US Dollar. For precious metals, however, none of this is good news.
For the past few months, we have been consistently reporting on the upbeat nature of most US equity markets. After months and months of progress, investors a few weeks ago began wondering if and when US equity markets will top out. Equity markets have been fairly volatile over the past week and a half and are showing signs that they may have topped out. The S&P 500, for example, moved from above the 2,000 level to near 1,950 in no time at all.
This time of year has historically proven to adversarial to equity markets, and this time around is no different. Though it is still too early to tell if equity markets will be edging downward over the next few weeks, early signs are pointing towards a stock pullback in the US.
Looking ahead to next week, I anticipate that the market will remain as quiet and subdued as it was this week. Though some economic data is expected to be made public, it is likely that the data will only have a very marginal impact on spot values. With that said, however, there is no real way of telling just how next week will unfold. What I can say, however, is that the focus of the global marketplace will remain fixated upon equity and currency markets.