Posted on September 30, 2014
Gold Spot Price Open: $1,218
Gold Spot Price Close: $1,209
Change in Gold Spot Price: -$9
Silver Spot Price Open: $17.63
Silver Spot Price Close: $17.06
Change in Silver Spot Price: -$0.57
Precious metals moved downward for yet another day on Tuesday, pressured by an ever-strong US Dollar. When all was said and done, gold lost about 9 dollars while silver dropped in value by more than 50 cents. Platinum and palladium also declined by noticeable margins today.
For a second consecutive day, the US Dollar hit a 22-month high against the Euro and another 6-year high against the Japanese Yen. A growing belief among investors around the world is that as the US Federal Reserve tightens monetary policy at home, central banks in Europe and elsewhere around the world will be loosening their policies. Though the USD Index cooled off a bit by the end of the day, it is continuing to trend higher and higher with each passing day.
For gold and silver, the consistently improving Dollar has done nothing but push spot values downward. As it stands, gold’s spot value has fallen by more than 6% for the month and 9% for the quarter. Gold’s downward movement over the course of recent history marks the sharpest monthly decline since June of 2013 and the first quarterly loss of 2014. Frances Hudson, of Standard Life Investments, commented on gold’s recent lack of progress by saying, “The dollar has been the overwhelming pressure on gold in the past month, which outweighs any safe-haven concerns in the Middle East and inflation fears.” Even the unrest in Hong Kong has not provided much of any support for metals during the early parts of this week.
The situation in Hong Kong has not changed much from yesterday, though there have been reports claiming that an increasing number of people have shown up to protest. At present, the situation remains mostly non-violent, but there is always the chance that things will deteriorate and become a bit more tense. If that does prove to be the case in the coming days, precious metals might be able to derive a bit of safe-have support.
Though the protests in Hong Kong have not provided gold or silver with much support, they have had a noticeable impact on the progress of stock markets in the US and around the world. Today, all three major US stock indexes trended downward for a majority of the day and ended in the red. Seeing as Hong Kong is widely considered to be the financial capital of the world, any unrest there will almost always translate negatively for US and world equities.
Though the first two trading days of this week have been somewhat quiet from an economic standpoint, things will begin to pick up come Thursday and Friday. On Thursday, the European Central Bank will be meeting for their monthly policy meeting, and the eyes of the world will be fixated upon the outcome. No one is expecting the ECB to make any major policy shifts, but the recently sub-par economic data from the region suggests that something might need to be done, and soon. Finally, on Friday, the US employment report from September will be made public. At present, the market is expecting to see healthy non-farms job growth. With that said, however, it will be interesting to see if the data lives up to recently lofty expectations.