Precious metals, which performed half-decently throughout much of the week, took a big hit on Friday thanks to an unemployment report that shocked just about everyone. On the whole, there were a few noteworthy happenings this week. Central bank policy changes, US economic data, and a few other items made their way into the news stream and made this a bit more of an eventful week than what we have come to expect from the month of August.
Loads of US Employment Data Dealt
As is typical of the first full week of trading in a month, there was a load of employment data dealt from the United States. The first of the data came in on Wednesday, when the ADP private-sector job growth report was dealt. Despite it showing that less than 200,000 private-sector jobs were created last month, the report was determined to be positive simply because it bested the expectations of market experts and economists.
A day later, the tone of employment data took a bit of a hit as the Department of Labor published a somewhat poor reading on weekly jobless claims. According to the data, last week saw 3,000 more first-time claims for unemployment benefits than was recorded the week previous. This brought the seasonally-adjusted average number of claims up by a little, but all in all this report had little impact on the wider global marketplace.
What did end up affecting the global market, and the precious metals market in specific, was Friday’s non-farm payrolls report released by the Department of Labor. In the lead-up to this report’s release, expectations with regard to its contents were mixed. On one hand, there were people who did not expect to see anything even close to resembling solid job growth, while others thought we might be in for a surprise. A surprise is exactly what we got as it was reported that more than 250,000 new jobs were added to the US economy in July. This was a figure that came in far above expectations, which were for a little less than 200,000 new jobs to have been added.
For gold and silver, this was not such good news as both metals began falling at high rates of speed to close out the week. Now, both of the aforementioned metals are going to close this first week of August reflecting upon losses, albeit somewhat small ones. For gold, however, a bad tone was set to close out the week as the yellow metal lost roughly 1% of its value on Friday alone. When things open up next week it will be interesting to see if delayed reactions from around the world will work to drive metals even lower, or if a recovery bounce will get the week off to a positive start.
Central Bank Moves in Japan, the UK
Even though the Federal Reserve has been quiet in recent months, that does not mean other central banks have to be as well. Earlier in the week Japan unveiled its newest stimulus package to the world. While we could talk about the exact details of this package all day long, the end-result was that the Yen moved downward against rivals, prompting the Dollar to have a good midweek run.
On Thursday, the Bank of England announced that it would be slashing interest rates as well as introducing a host of other policy changes to combat fears stemming from BRExit. Thus far the reaction to this move by the BoE has not been overstated as many people simply do not know what the future holds for the EU and UK economies respectively.
Looking ahead to next week, I anticipate that things will quiet down considerably. In fact, the further we venture into the month of August the less hectic the marketplace will be. Of course, this is barring any unforeseen developments across the global economic and geopolitical landscapes.