Gold and silver began the week in impressive fashion, making sizeable gains through the first two days. Shortly thereafter, however, those gains were erased and the losses began to pile. From Wednesday through to the end of the week, both gold and silver were the subject of a decent amount of losses, thanks to a variety of factors.
As far as notworthy happenings are concerned, there were quite a few to talk about this week. First was the European Central Bank meeting. This was such a big deal because the currently running Quantitative Easing program is soon to be completed, and people are curious to see whether the ECB is going to expand/extend the program, or simply let it run its course and move on. This week, the ECB’s monthly policy meeting came and went with little to nothing to talk about as a result. While some were expecting at least some clues with regard to what the future might hold for the EU’s monetary policy, such did not prove to be the case. In fact, investors were left not knowing anything new by the time the ECB meeting wrapped up on Wednesday.
Hawkish Comments from the Fed Fail to Move Markets
The monthly FOMC meeting is just around the corner, and as is typical for a week leading up to the meeting, central bank presidents were commenting on what they want to see as far as monetary policy is concerned. Presidents from the Boston, Kansas City, and Richmond Federal Reserve banks all commented this week saying that the labor market and the US economy in general are all strong enough to warrant a “normalization of monetary policy.” What this means is that the aforementioned Fed presidents want to see interest rates raised. In fact, there was even mention of September being the perfect time for rates to be raised. With the meeting only a short while away, it will truly be interesting to see what the Fed decides to do—or to not do.
Weekly Jobless Claims Impress Again
For yet another week, the Labor Department’s reading on weekly jobless claims impressed the entire global market. This time, the number of first-time claims for unemployment benefits fell by another 4,000 to bring the seasonally-adjusted average number of claims below 260,000. This is good news, but even more significant is the fact that this is now the 79th consecutive week where the average number of claims was below the 300,000 mark. This is a truly impressive feat and does well to highlight just how strong the labor market in the US really is.
Even more telling, and in the eyes of investors more important, was the fact that the 4-week moving average of claims, which is widely considered to be a more accurate picture of the labor market, fell by almost 2,000. Even despite the weak job growth in August, the overall picture of the US labor market is a positive one. The labor market being a huge determinant of whether interest rates are kept steady or risen, any data coming from that sector of the US economy will be of extreme importance to investors. This is almost always the case, but with the interest rate hike situation as uncertain as it has ever been, any bit of jobs data at all is going to be analyzed closely.
Other US economic data dealt this week included the ISM non-manufacturing index, and that reading came back significantly poor than expected. While most analysts were calling for a decrease in the services sector from July to August, no one was anticipating that the largest part of the US economy would have pulled back as much as it did. This gave gold and silver a momentary boost, but did not end up leading to anything in the way of sustained gains.