Investors began this latest 5-day trading session hoping that gold and silver would be able to build upon last week’s gains in the wake of a weak employment report for December. While things were looking up on Monday, a fresh batch of US economic data as well as upbeat earnings reports from many major companies turned the tide against precious metals over the course of Tuesday, Wednesday, and Thursday. Friday saw gold and silver make some small gains but even they were not enough to prevent gold from having a losing week for the first time in about a month.
In all, there really wasn’t too much to talk about this week as economic data was light yet mostly upbeat. Fears with regard to further reductions to QE are resurfacing in the wake of a 5-day session that was wholly positive for global equity markets.
Global Economy Improving, Gold Hanging In
If you had any reservations about the state of the global economy, this week likely put them to rest. Across the globe we witnessed strong equity performance that translated into more downward pressure being placed on precious metals. Factory orders, retail sales, and earnings were all reported as being on the uptrend in the United States, the world’s largest economy. Early on in the week, US stocks began making large gains, something that worked as a catalyst to propel other stock indexes around the world to do the same.
With all of this robust equity growth going on around the world investors are beginning to ponder the prospect of future tapering decisions being made by the FOMC. The Fed is scheduled to meet on the 28th of January and at this point it is unclear whether or not they plan on making any sort of policy changes. Earlier this week, however, two voting members of the FOMC stated that they would like to see QE completely done away with by the end of this year. Over the course of the next few months the future of Quantitative Easing will likely be a recurring theme amongst investors both in the US and around the globe.
Gold and silver’s gains on the last day of the week can be attributed to a weaker US Dollar and more stagnant US equities. Just like was the case a week ago, precious metals investors will hope gold and silver can build upon today’s gains next week. Martin Luther King day is being celebrated on Monday of next week which means that we may witness a quieter trading atmosphere, at least in the United States.