Precious metals spent most of the week conceding value thanks to upbeat US economic data, further bleak analysis of China’s growth prospects, and some lingering geopolitical issues. When it comes down to it, the story really hasn’t changed all that much and market conditions are just as stacked against precious metals now as they have been for the better part of the past few months. Last week saw some safe-haven demand push spot values upward, but those gains were short-lived.
Weekly Jobless Claims Tick Upward
This week did not offer an abundance of economic data, but the data that was made public did end up striking a chord with investors both in the US and abroad. According to the Labor Department, first-time claims for unemployment benefits ticked up above a seasonal average of 280,000. The Labor Department did not cite a reason for last week’s increase and did not seem overly concerned about the relatively small upward movement.
In my opinion, last week’s increase in unemployment claims is due to the fact that retailers have already begun laying off seasonal workers. With the holidays behind us, and retail sales in a slump of sorts it was never likely that season employees would be retained much past the end of December. Looking ahead to the coming weeks, the focus of investors will be on the employment situation in the US as it very much affects the likelihood that the Fed will pursue further rate hikes this year.
Iran Sanctions on the Table
Geopolitics, though absent from the headlines for much of the past few months, have made a resurgence in the last few weeks. Just this week, it was reported that two small US Navy ships drifted off course and ended up in waters controlled by Iran. Iranian naval vessels took control of the drifting ships and brought the US sailors to shore.
Though this seems like the makings of a big deal, the reality of the matter is that Iran simply allowed the soldiers to stay overnight and depart with their ships upon daybreak. This event is big news because it comes just weeks before Western-imposed sanctions are set to be lifted. If sanctions are lifted according to plan, most people are under the impression that Iranian crude oil will immediately be shipped to Western markets where it has not been allowed for years now. This is a big event that will certainly catch a lot of attention over the coming weeks.
Beige Book Suggests Economic Expansion
The Federal Reserve Beige book, which gauges economic growth across all 12 Federal Reserve districts, was released on Thursday and showed that the US economy is still expanding at a nice rate. Most districts showed moderate growth, while some reported growth that was a bit more impressive than that.
For the US Dollar, the upbeat Beige Book prompted gains to be made in the face of other currencies from around the world. Of course, this news meant losses for gold and silver almost immediately. Now back below key psychological price points, gold and silver are continuing to struggle. This is something that has been a recurring theme across the global marketplace. Really, so long as China is performing weakly from an economic standpoint it is going to be difficult for gold and silver to make any lasting gains.