Gold and silver fared well this week after gold posted its first 5-day loss in over a month 7 days ago. The most heavily anticipated piece of US economic data of the week came today in the form of the employment report for January. Though this did help precious metals’ prospects, a small rally by US equities prevented gold and silver’s gains from being greater than they were. Nonetheless, gold is now settling in close to $1,270 per ounce while silver has once more cross the $20 threshold.
ECB Meeting Yields No Major Changes
The European Central Bank held their monthly policy meeting earlier this week and, as always, it caught the full attention of the European marketplace. In the lead-up to the meeting some investors and market analysts were speculating that the ECB may ease up on interest rates in light of recently positive economic form. To that end, this latest 5-day session was yet another one full of mostly positive economic data from Europe. Though no major policy moves came as a result of this week’s meeting, next month’s meeting may be different.
Should Europe’s positive performance carry on for the next 4 or 5 weeks, next month’s policy meeting may yield some sort of shift in monetary policy for the region. Annual growth for the EU is projected to be better in 2014 than it has been in the last 5 years and so long as the upbeat data keeps flowing that projection is seemingly bound to come to fruition, at least at this juncture.
More Disappointing US Jobs Data
The monthly jobs report for January has been a point of interest for investors ever since December’s report came in well below market expectations. At the time of December’s employment report, many were feeling strongly about the US economy and most data released at the time was on the upbeat side. In the aftermath, however, questions with regard to the US economy’s strength surfaced and the marketplace became apprehensive.
This week’s employment report was expected to show roughly 190,000 new jobs added in January. Compared to recent months this was a relatively low forecast, but also a generous one when you take into consideration December’s employment report. Today it was announced that barely over 110,000 jobs were added in January, nearly 80,000 fewer than expected. This news prompted gold and silver to make gains, but also boosted the recently ailing US stock markets. When all was said and done, gold settled in with a decent daily gain, as did silver. Now, the question on every investor’s mind is whether or not the Fed made the right decision when they tapered Quantitative Easing by another $10 billion barely over a week ago. Though the reality of the matter is that tapering’s real effects won’t come until sometime further down the line, the more immediate effect is that the marketplace is growing continually anxious. The fact that the Fed has made two decisions indicative of a strong economy during a time of sub-par economic data is very misleading for many investors.
Though the US economy is clearly in a bit of a rough patch currently, most market experts are convinced that tapering will ensue throughout the coming months.