Gold Premiums See Slight Weekly Increase as Fed Stays Put
Gold coin premiums saw very modest increases this week, although it was a busy week for gold in general with the Federal Reserve’s policy-setting meeting on the schedule.
The Fed moved as expected, and left interest rates as is, but its commentary suggested that a rate hike in December was likely. Overall, gold prices advanced this week although on Friday they saw a modest decrease. On Friday gold finished down 0.2%, but over the week the yellow metal added 2.4% to its value, its largest weekly increase in about two months.
Friday’s retreat in the value of gold was attributed to a strengthening greenback. The US dollar moved higher on Friday and this pressured a bunch of commodities. While commodities saw pressure across the board, oil prices saw the steepest declines. West Texas Intermediate oil futures fell by 4% on Friday. While the US currency contributed, most of oil’s price descent was attributed to decreased expectations that OPEC will come to an agreement to stabilize the oil market.
During the week gold premiums increased, indicating decreased investor interest for physical gold. The gains; however, were modest. Premiums on American Gold Eagle coins increased to $60.15 from $59.16, premiums on American Buffalo coins edged up to $61.15 from $60.48. Premiums on Canadian Maple coins increased to $46.79 from $46.10. Gold coin premiums could continue to appreciate through the end of the year, due to increased seasonal demand for physical gold and the delay to the Fed’s rate hike. However; come December if the Fed hikes rates, a sell-off is likely. In the meantime, gold could respond in a knee-jerk fashion to economic data reports and geopolitical developments. Geopolitical uncertainty and negative economic data could be gold supportive.