Precious metals began the week making decent gains, especially when you consider interest rate expectations and the tone of US economic data. During the week, we were on the receiving end of some important data as well as a few eyebrow-raising talking points.
Even though, by Wednesday, both gold and silver were poised for nice weekly gains, the final 2 days of the week reversed most of the progress made by metals. Still, by the time markets closed on Friday most metals were looking at weekly gains, even if only marginal ones. This, in and of itself, is an impressive feat.
Economic Data Dealt
As was previously mentioned, this past 5-day trading session did see us dealt a good bit of data, most of which was from the United States. Before we talk about the US data, it is important that we mention the data points we received from China. For the first time in a while, Chinese data that was dealt, though not overly impressive, matched the expectations of market experts.
On an annualized basis, the Chinese economy grew by 6.7% during the third-quarter of this year. Also on an annualized basis, September saw 10% growth as far as retail sales are concerned. Though these numbers might lead you to believe that this type of growth is exceptional, it was really right in line with expectations. At the end of the day, however, this data was great because for the longest time most pieces of economic data have missed the mark for China.
In addition to discussion points from Asia, the US also saw a good bit of markets-moving economic reports dealt. The first piece was dealt earlier in the week and it had everything to do with the housing market, which is extremely important in the eyes of those interested in the trajectory of interest rates going forward. On Tuesday, we learned that the number of September housing starts—that is, number of houses whose construction broke ground—fell by about 10% when compared to August. On its face, this is a very poor piece of information, but it was kind of offset by the larger than expected uptick in building permits issued during September. Then the very next day, metals were beaten down by existing home sales data that defeated the expectations of most. Officially, September saw existing home sales improve by more than 3% from August. This points us to the conclusion many people have held for a while now, and that is that the housing market in the US is quite strong at the moment.
Also on Thursday, metals were given a bit of support from the Department of Labor’s reporting that first-time claims for unemployment benefits shot up by about 13,000, bringing the seasonally-adjusted average up to 260,000. While not the best news, any seasonally-adjusted average beneath the 300,000 threshold is going to lead investors to believe that the US labor market is healthy and strong. So long as that is the belief, interest rate hikes are going to be expected in the near future.
Finally, Thursday also saw the global market react to what many are calling another Hillary Clinton presidential debate victory. For yet another time, Donald Trump—the GOP nominee for president—was seen as brazenly disrespectful and flat-out lost at times. For metals, Hillary Clinton gaining momentum is something that will lend absolutely no support to spot values. Clinton is seen as the status quo, while Trump is seen as a wildcard that we have never experienced. As such, Clinton’s continued strength on the debate stage has not bred any sort of safe-haven demand. Had the opposite held true, and Donald Trump won the debate, we very well might have seen a nice uptick on the part of spot values. Though we are less than a month away from the US presidential election, most people are already considering Hillary Clinton to be a shoe-in for the top spot on Capitol Hill.