Precious metals experienced quite a wild week, with the fiscal cliff driving most of the action. Late on New Years Day, legislators passed a bill to extend certain tax cuts and heighten the debt ceiling, largely averting the fiscal cliff’s ramifications for the time being. As a result of this resolution, both stocks and precious metals experienced a nice bump, but unfortunately it was short-lived.
Metals Drop on Stronger Dollar
After gold hit a two-week high on Wednesday, both precious metals started giving back their gains rather quickly. The fiscal cliff deal indicated a stronger dollar, despite the fact that all the deal really did was avert crisis for a couple more months. The dollar actually hit a three week high against a basket of currencies, which was too much for silver to withstand, falling nearly $0.90 during the day’s trading. Gold fell as well, dropping $24.
Fed Minutes Push Metals Down Further
After experiencing the brunt of a stronger US dollar, gold and silver took further hits Friday morning in reaction to the released Federal Reserve minutes that most analysts believe signify a coming end to quantitative easing.
The minutes indicated that several Fed officials believe the central bank will be able to slow or stop quantitative easing before December 2013. These QE programs have been a large driving force behind gold’s and silver’s recent runs, so this dealt a large blow to both metals.
After opening sharply lower Friday, the metals took further hits when a jobs report was released by the Labor Department, indicating the US added 155,000 jobs to nonfarm payrolls in December: a rather positive number.
The jobs news added further losses, as the day’s trading drove silver down to a closing price of $30.26, with gold closing for the weekend at $1,657.
Overall, silver moved from $30.05 Monday morning to $30.26 at the Friday close, while gold opened at $1,662.20 Monday, and closed Friday at $1,657. A rather sideways week for metals with a lot of excitement in between.
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