Bullion investors were pleased this morning to see their holdings appreciate in value. The spot price of gold climbed back up above $1300 per ounce while silver bounced back up above $17 as the Federal Reserve raised interest rates and indicated that there would be further interest rate hikes in the future because of rising inflation. Evidence of inflation comes with rising fuel and import prices. Platinum also enjoyed a rise as it increased more than $10 since last week (6/7-6/14). Palladium, on the other hand, continues to hover around the $1,018 mark. The price of silver per ounce has now reached the benchmark set in mid-April and is enjoying a six-month high for a low of $15.91 set back in December.
The decision to raise rates comes as the GDP of the United States continues to increase healthily. The number of new jobless claims has decreased by 4,000 to about 218,000 new applications in the previous week. Retail sales increased by 0.8% in May. Also by 2% since the beginning of the year in support of a stronger economy.
On the other side of the pond, the European Central Bank has announced that they will not increase interest rates. Moreover, they do not expect to increase them until the summer of 2019.
However, the ECB will continue their bond-buyback scheme until the end of this year, after which that program will be phased out. This has resulted in a very interesting dynamic: with the Federal Reserve increasing interest rates, prices of precious metals should have gone down but with the ECB deciding against a similar move, that has led to an increase in precious metals prices. The future is uncertain as we continue to monitor the situation.
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