Weekly Market Reports

Gold Nears 6-Year High as Fed Hints at Rate Cuts

Daily Gold & Silver Market Report – 6/21/2019

  • Dovish tone from Fed sends support to Gold.
  • Platinum prices struggle to rally.
  • White House explores changes at the Fed. 

The price of Gold stabilized on Friday after rising to near 6-year highs. This price rally comes amid news from the U.S. Federal Reserve, along with other key central banks, that dovish days are ahead. Escalating tensions in the Middle East have also led to market uncertainty, and in turn, gathered support for Gold. The spot price of Gold was up 0.1 percent to $1,388.60 per troy ounce at 5:58 a.m. (ET), after previously reaching its highest since Sept. 2013 at $1,410.78. Economist Howie Lee told CNBC that “The Iranian tensions provided the catalyst for Gold to inch above $1,400, after threatening to break above that level since yesterday’s dovish Fed outcome.” Lee also points out that “There is a perfect mix of ingredients for Gold’s rush to the top -- a weak macroeconomic environment, low bond yields, soft dollar and rising geopolitical tensions.”

The Fed met earlier this week to discuss monetary policy and signs of a slowing economy. Following similar announcements from the European Central bank and the Bank of Japan, the Fed confirmed its intent to lower interest rates. Fed officials went so far as to say that the first rate cut may occur as early as July. By cutting interest rates, the Fed confirms observations that the economy is weaker, giving investors a reason to buy safe haven assets such as Precious Metals. Falling interest rates also hurt the value of the U.S. dollar, making Gold a better buy for those with other currencies.

Platinum Struggles to Gain Momentum

Last week, Platinum prices aimed toward closing the week above $817 per troy ounce but failed. This week, on Tuesday, Platinum moved to a lower low of $790.30 but stayed above $800.00 for the rest of the week. Analyst Mahmoud Alkudsi observes on DailyFX that this reflects the weakness of the buyers to push prices higher. He writes that if Platinum can close above the lower end of the trading zone, “it might rally towards the higher end. The price could head towards $877.0 contingent on remaining above the aforementioned neckline.”

Trump Administration Explores Changes at the Fed

Both on Twitter and elsewhere, U.S. President Donald Trump has expressed his dismay with the Federal Reserve and chairman Jerome Powell. Earlier this week, when asked directly if he wants to demote Federal Reserve Chairman Jerome Powell, Mr. Trump said, “Let’s see what he does.” The New York Times reports the President may be disgruntled with the central bank’s approach to long-term economic health, a plan that could weaken the stock market ahead of upcoming elections. Current law forbids a president from firing any Fed governors without cause. The statute is unclear about whether or not a president can, in fact, fire a Fed chair, and there is no precedent to serve as a guideline.

Business ethics professor Peter Conti-Brown told the Times “If Mr. Trump did demote Mr. Powell and the latter filed a lawsuit challenging whether it was lawful to strip him of his chairmanship, the outcome could turn on the philosophy that a judge brings to the question of how to interpret statutes.”

At 9:24 a.m. (ET), the APMEX Gold and Silver spot prices were:

  • Gold, $1,401.50 Up $5.50
  • Silver, $15.45 Down $0.14
  • Platinum, $806.00 Down $2.60
  • Palladium, $1,507.00 Up $14.40

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APMEX Market Reports provide our readers with a review of spot price activity and some of the factors that may be affecting the market for Precious Metals. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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