Precious metals spot values are moving forward today to close out what has been an interesting week. We have seen spot values jump around quite a bit, and despite today’s gains it seems as though both gold and silver are going to end the week having posted losses. This is the first time this year we have seen metals post weekly losses, but all in all gold and silver are still in good standing.
On the whole, this week was quieter than the last 3, but we did have plenty of economic data for investors to mull over, including year-end corporate earnings reports, weekly jobless claims from the US, and the latest FOMC meeting. All of the aforementioned factors had some sort of impact on the precious metals market and contributed to both the gains and losses that were made this week.
Corporate earnings reports are always a big deal for investors, and this week’s batch was no different. In fact, because this week’s reports were from 2014’s fourth quarter, they were especially important to investors. You see, with the 4th quarter playing host to the holiday season, investors read into this data more so than the reports released at any other time in the year. Further, it is common for investors to expect fourth quarter earnings to be some of the year’s best.
Unfortunately, this week’s batch of corporate earnings reports mostly disappointed. Proctor & Gamble’s earnings fell far short of expectations and P&G cited the surging US Dollar as a major reason behind why overseas earnings were downgraded. With the Dollar advancing against most other currencies in recent months, any money made by P&G that is not denominated in USD will hurt the company’s bottom line.
Microsoft was a big surprise in that they too released corporate earnings for the fourth quarter of 2014 that fell far short of expectations. On the other hand, Apple reported strong earnings, though they usually perform pretty well all year round. Thanks to the mostly downtrodden earnings reports, stocks in the US faltered this week and were seen trading downwards for a majority of the 5-day trading session. This, I think, is a major contributing factor behind precious metals’ volatile week.
The big news of the week came on Wednesday in the form of the most recent FOMC meeting. To the surprise of almost no one, the Fed decided that it would leave interest rates unchanged for the foreseeable future. Though this was not surprising, most investors were shocked to see that the Fed removed the “considerable time” language out of their talks regarding interest rate hikes.
Still, the overriding belief held by many is that interest rates in the US will be left unchanged at least through 2015, if not further. With the erratic price action of crude oil, volatile equity markets, and a number of other factors, it is generally agreed upon that the FOMC would be best served leaving rates unchanged for now.
Looking ahead to next week, it will be interesting to see if metals can bounce back from this week’s losses or if a stronger US Dollar will continue to pressure metals.