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Gold, Silver Prices Take a Deep Dive to End the Week

August 19, 2016 at 17:29 by Andrew Moran

Gold and silver have been trading very well over the past couple of trading sessions. That ended on Friday as the two precious metals took a deep dive to finish off the trading week.

December gold futures dipped $10.10, or 0.47%, to $1,340.99 per ounce at 17:03 GMT. Gold topped $1,350 an ounce twice this week on news that the Federal Reserve will take a slow approach to raising interest rates for the remainder of 2016 and in early 2017.

Silver also took a beating to end the week. September silver futures slipped $0.40, or 2.03%, to $19.34 an ounce. Silver has been rather volatile throughout much of August as the metal has regularly crossed back and forth the important $20-an-ounce threshold.

Although the US central bank will likely not be raising interest rates until perhaps December or February, there have been conflicting statements from the Fed and its officials. Traders will attempt to disseminate the information until Fed Chair Janet Yellen delivers a speech during the central bank’s annual summer retreat in Wyoming next week. This is where she is expected to provide some clues to short-term monetary policy and her outlook of the US and global economy.

Both metals can be negatively affected in a rising-rate environment. Since they do not provide a yield, their allure diminishes and investors seek out yield-producing assets in the open market.

The market is ultimately taking a wait-and-see approach to a potential Fed rate hike.

Meanwhile, the US economy has once again produced mixed signals.

It was reported that the number of Americans filing for unemployment benefits fell more than expected last week. Also, manufacturing activity in the US experienced a slight bump this month so far. US home sales climbed to a nine-year high last month.

On the other hand, US retail sales in July weakened and the producer price index (PPI) unexpectedly declined. Both reports sent US investors into the eurozone bond market.

If you have any questions and comments on the commodities today, use the form below to reply.

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