Precious metals started the week positively, moved through the middle parts of the week in disappointing fashion, and ended the week on a positive note. For all intents and purposes, this week was a wash as metals did not finish too far from where they began. As we look ahead to the longer-term future, the fact of the matter is that precious metals are going to have a difficult time making any large gains that are able to be sustained. Even though we report, day after day, that investors are not expecting interest rates to move in the coming months, their investing activity suggests otherwise. Basically, so long as additional interest rate hikes are on the horizon, the Dollar is going to remain strong and precious metals will have a tough time moving forward.
US Economic Data Dealt This Week
These last 5 days of trading have brought about a decent bit of economic data from the US and elsewhere around the world. Though this may not be too surprising, it was reported that consumer prices during the month of March barely rose from the month before. Most were expecting a modest increase and this week’s data did well to prove those expectations wrong.
On the bright side of the US economic slate was the weekly jobless claims data, which came in far better than expected. Last week saw first-time claims for unemployment assistance fall by roughly 13,000, bringing the seasonally-adjusted average down to a comfortable 253,000. Not only were investors and market experts expecting the seasonally-adjusted average to climb to or above the 270,000 mark, they were also expecting a weekly increase. This is just one more sign that the US employment sector is still performing well. What’s more, it lends credence to the belief that interest rates are going to be hiked sometime in the near future—whether it be this month, next month, or in June. In fact, there are some people who think there is potential for 2 increases during that 3-month timeframe, however most people have their doubts about that.
IMF Lowers Global Growth Forecast
In an announcement that was not as shocking as it might have initially appeared, the International Monetary Fund spoke this week, lowering their initial projections for 2016 global growth. In December, the IMF said that it expected the wider global economy to grow by roughly 3.4% this year. Now, after a first-quarter that failed to really impress, those expectations have decreased.
Continued weakness on the part of China, lower crude oil prices, and, as a result of that, a particularly weak energy sector are all contributing factors to the IMF’s downgraded expectations. No one was exactly surprised by the IMF’s announcement and markets did not react as most thought they might. Throughout most of this week, in fact, both the US Dollar and global equities performed well. That is, of course, if you exclude energy equities, which once again did not have such a great 5-day trading session as one of the United States’ biggest energy companies applied for bankruptcy protection.
As we look ahead to next week, we are inching ever-closer to the April meeting of the FOMC. There were a lot of comments made by members of the Fed over the past few weeks about what they think should be done to interest rates, and most are in favor of raising them sooner than later. The thing is, most of the people who were in favor of such a move have no voting power on the FOMC, and their opinions are little more than solitary, yet educated, opinions. Regardless, it will be interesting to see what the Fed has to say about the future of interest rates at this upcoming meeting.