Gold and silver spot values have had an interesting week, but will ultimately lose out on making this a third consecutive week of gains. After starting Monday and Tuesday by adding value to last week’s gains, Wednesday and Thursday saw spot values concede most of what they had gained during the previous two days. Though there hasn’t been much economic data made public this week, the market was paying close attention to the growing strength of the USD; something that ultimately limited buying interest in gold and silver.
Like was previously stated, there wasn’t too much economic data on this week’s slate. Today, however, September’s US housing data, as well as housing data revisions from the past few months, were made public for investors to mull over and discuss.
Revised Data Pressures the Greenback to Close Out the Week
As fate would have it, one of the biggest market-moving pieces of economic data was made public today in the form of September’s housing data. According to the data, sales of new homes increased by .2% on an annualized basis and came in at a modest 467,000 for September. Compared to market experts’ expectations of 470,000, the data did not miss the mark by too much.
What did hurt the US Dollar, however, was a revision that showed August’s housing figures be reduced from an original report of nearly 505,000 new home sales, to a more modest reading of 466,000 sales. What’s more, both June and July’s figures were also revised downward. The fact that this data weighed heavily on the progress of the US Dollar translated into a day of modest gains for precious metals spot values. Unfortunately, today’s gains were not enough to undo the value lost during the middle of the week by metals.
All Eyes on the European Central Bank
Helping the Dollar along for much of the week while simultaneously pressuring the Euro currency were rumors claiming that the European Central Bank is on the verge of announcing the blueprints for increased asset purchases, also known as quantitative easing. Though no one can say for sure if or when the ECB plans on making such an announcement, the rumors alone were enough to pressure the Euro, boost the Dollar, and ultimately doom metals to recording weekly losses for the first tie in three weeks.
As we look ahead to next week, investors will continue to keep a close eye on Europe as many feel as though it is only a matter of time until some sort of policy shift is enacted. With the EU economy slowly but surely heading into a downward deflationary spiral, it is clear to see that something needs to be done, and soon.
For gold and silver, unfortunately, any type of quantitative easing announcement will more than likely give the greenback a boost. As an asset that competes directly for investor attention with gold and silver, any progress made by the USD will ultimately weigh on the progress of metals.