Precious metals did not make much in the way of gains to close out the week and were mostly stagnant thanks to some better than expected employment data from the United States. The fact of the matter is that the biggest splash made this week was by the slew of employment data released Wednesday through the end of the week. There was some other US economic data released this week as well, but it really didn’t have much of an impact on markets other than giving the outlook on the US economy a bit of a boost.
All in all, the 4th of July holiday falling on Monday resulted in this being a shortened and rather dull week of trading. Many investors are on vacation and that is resulting in a much calmer, subdued marketplace. It also probably has a lot to do with why global stock markets have calmed down this week.
Gold Suffers at the Hand of Upbeat Employment Data
This week was full of employment data from the US for the month of June, but none was more important than the US non-farm payrolls report. First up, however, was the ADP private-sector employment report which showed that more than 170,000 new private-sector jobs were added to the US economy. This beat expectations, which held that only 150,000 private-sector jobs were created. As is typically the case, the ADP report had very little noticeable impact on US markets other than giving investor confidence a bit of a boost.
On Thursday, the Labor Department released its weekly unemployment report from the US. The report showed that more than 10,000 fewer claims for unemployment benefits were filed last week from the week before. This brought the seasonally-adjusted average down to a more respectable level and once again boosted confidence that the employment sector is doing well.
Finally, on Friday the Labor Department released its non-farm payrolls report and it absolutely dismantled expectations. It was nice to see such strong gains during the month of June, which is a time of year when the economic data stream is light and devoid of many talking points. Officially, more than 280,000 jobs were added in June, making it the best month for job growth since October.
ISM Non-Manufacturing Index Ticks Upward
In other US economic news, the Institute for Supply Management released their reading on non-manufacturing performance for the month of June, and the figures came back overtly positive. Not only did the service sector grow last month, it grew by much more than was expected. This is particularly good news because the US is largely a service-based economy and any news showing that the service sector is improving will be welcomed with open arms.
BRExit Focus Continues
The latest bit of fallout from the recent BRExit vote is that investors the world over are slowly but surely coming to terms with the strong likelihood that we will not see any further rate hikes this year. While it was talked about immediately following the UK vote, a few weeks have passed and the general consensus is that we would be extremely taken aback to see rates raised at any point in 2016. While there has been no official confirmation on the part of the Fed, most market experts agree that a move to raise rates is one that would surely result in economic turmoil here.
Going forward, you can expect that BRExit will still be on the minds of investors even months down the road. At the present moment in time, there is a lot of confusion circulating across the global marketplace, and until that confusion dissipates, safe-haven metals are going to remain a likely beneficiary. The one drawback to this is, of course, if any news breaks that would ease the minds of global investors, the recent rally metals have gone on is prone to coming undone altogether.