Precious metals bounced around between small gains and losses all week, as spot values were influenced by the sizeable batch of economic reports that have been dealt since Monday. On the whole, economic data from the US was upbeat, but a few downtrodden reports mixed in helped metals regain some ground lost. Also helping prop up spot values is the fact that physical demand for gold and silver is spiking in places like Asia. This is almost wholly thanks to the fact that spot values are so low currently.
As we head into the next week, you can bet that the US presidential election will take center stage. Even though most people are chalking up Hillary Clinton as a surefire winner of an election that is a little more than a week away, there is still plenty of time for the pot to be mixed. As it stands, however, the expectation the Clinton will take over control of the White House is something that is not helping metals at all. A Trump victory, though unlikely, is something that many analysts believe would spur a lot of safe-haven demand due to the uncertainty that a Trump-led US would bring about. For now, however, it seems as though we are in for much of the same.
US Data Dealt All Week
While there were plenty of things happening across the global marketplace this week, few of them were able to overshadow the large slate of data from the United States. Making a big splash this week was a slew of housing data, most of which was upbeat in nature.
First up was September’s new home sales report. Despite September’s new home sales improving by 3% when compared to August, the report was viewed as disappointing simply because market analysts expected that number to be higher. On top of that, we are still seeing the seasonally-adjusted average number of new homes sold this year remain under the 600,000 threshold, at 593,000. Expectations called for that 600,000 mark to be eclipsed. While, on its face, this report was a bit disappointing, the fact of the matter is that when you compare September 2016 to September 2015 as far as new home sales are concerned, it is hard to be disappointed with what you see. Officially, 30% more new homes were sold this past September than in September of 2015. If nothing else, this data does well to drive home the point that the US housing market is doing extremely well and has improved dramatically over the past year or so.
In addition to this, we received news on durable goods orders, although the news was not quite as upbeat. According to the data, September saw durable goods orders fall by .1% from the month before. After both July and August saw this same data point improve month over month, it was less than encouraging to receive September’s data.
While these reports did, in a way, lend some support to gold and silver, the fact of the matter is that the underlying tone of economic data in the US is wholly positive. Even with the extremely critical eye through which we are viewing any and all data points, most reports are checking out and lending themselves to those who would like to see interest rates raised come December.
GDP Data Supports December Rate Hike
All this week investors were gearing up for the Q3 GDP data from the United States. With interest rate hikes supposedly less than 2 months from taking place, this particular data point was always going to be crucial.
For the monetary policy hawks, it was music to their ears to hear that the US economy grew at a faster rate than was expected during the 3rd quarter of this year. According to the Bureau of Economic Analysis, the US economy grew by 2.9% during Q3. A major factor contributing to this growth was spending on the part of consumers, which picked up by more than 2% when compared to Q2 of this year.
Seeing as the US economy only managed 1.1% growth through the first 6 months of the year, the more than 2% growth realized in Q3 alone was seen as an overly impressive number according to most experts.