European Central Bank Decision Causes Drop in Gold Prices

Cassie Bastien

6/8/2017 2:33:07 PM

Daily Gold & Silver Market Report – 06/08/2017

Gold prices are set to continue their declines as investors prepare for what MarketWatch News Editor Rachel Koning-Beals says is “a flurry of potentially market-moving news around the globe.” In recent news, the European Central Bank (ECB), which could prove bearish for Precious Metals, “tweaked the so-called “forward guidance” in its policy statement, leaving the impression that it may be inclined to reduce its accommodative posture by lifting interest rates or scaling back its bond-buying program in the near future.” Following the ECB's decision to stick with current interest rates, the euro eased and the U.S. dollar increased, pushing Gold prices lower. Koning-Beals said, “The ECB said it continued to expect interest rates ‘to remain at present levels for an extended period, and well past the horizon’ of its asset-purchase program, which is set to run at least through December.” When the dollar strengthens, it can cause Gold, along with other dollar-denominated commodities, more expensive to buyers using other monetary units, presumably lowering demand. According to the U.S. Labor Department, “the number of Americans seeking unemployment benefits fell in early June and remained near the lowest level in decades, falling 10,000 to 245,000 in the seven days from May 8 to June 3,” Koning-Beals reported. Naeem Aslam, chief market analyst with ThinkMarkets, said the yellow metal “is trading lower as traders have pretty much made up their mind that there is no smoking gun when it comes to [former FBI Director] James Comey testimony today... The major focus will be back to the fundamentals and what the [Federal Reserve] will do with respect to their monetary policy.”

The Price of Silver Holds Steady

Investors braced for the U.K.’s parliamentary election outcome, causing spot Silver prices to hold steady. The election “is being held against a growing security threat following three separate terrorist attacks over a span of ten weeks,” Reporter Sam Bourgi says. “After a rocky few weeks for [Conservative] Prime Minister Theresa May, polls on the eve of the election showed a likely boost to her party’s majority in the House of Commons.” A few days ago, YouGov said the British Conservatives were on track to lose their majority, a nightmare scenario for a party on the brink of Brexit negotiations. If that happens, Bourgi says Precious Metals, such as Gold and Silver, are expected to rise.

• The U.S. dollar index (DXY) rose 0.1 percent through the early morning to trade at 96.87 (EconomicCalendar.com).

Former FBI Director Testifies

Fired FBI Director James Comey testified Thursday saying he was “confused” and “concerned” when President Donald Trump explained Comey's firing was for undermining the morale of the FBI, which Comey led since 2013. Comey said, “Those were lies, plain and simple,” and he is sure he was fired because of “the Russia investigation.” NBC News Reporters Ken Dilanian and Corky Sienaszko said, “Questioned about Trump's public statement that Comey had “better hope that there are no tapes of our conversations,” the former director replied, “Lordy, I hope there are tapes.” Comey's unflinching remarks to the Senate Intelligence Committee, even acknowledging his fear of the president's deception, made for a dramatic morning of public testimony, causing worry within world markets. “While Comey stated emphatically he had no doubt at all that the Russians tried to influence the election,” Dilanian and Sienaszko explained, “Trump was watching the unfolding drama in the White House dining room with his legal teams and close advisers.”

At 3:32 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,281.60 Down $11.60
• Silver, $17.53 Down $0.20
• Platinum, $941.50 Down $8.60
• Palladium, $835.50 Up $18.80

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