Precious metals finished the week on a clearly positive note thanks to some less than impressive statistics on job growth in September. Despite consecutive losses through the first few days of the week, gold and silver spot values rebounded nicely on Friday to make this week a bit more impressive than it wouldn’t have been otherwise.
The focus of the global marketplace remains on interest rates in the US and whether or not they are soon going to be hiked. US economic data took up most of the week, but it was a mixed bag so the outlook on interest rates has not changed all that much.
US Employment Data Disappoints, Gives Metals a Boost
In the lead-up to Friday’s employment data release, investors were carefully analyzing the economic data stream that was coming from the United States. While some of the data was upbeat, other bits were less than stellar. Finally, when Friday rolled around, people were disappointed to see that job growth in the month of September came back less than what was expected. Despite most people expecting to see the US economy create more than 200,000 jobs during September, the actual figures showed that fewer than 150,000 jobs were actually created. In addition to that, July and August’s employment reports were revised downward, further negatively affecting the outlook on the US economy.
In addition to job growth being less than impressive, the Labor Department went on to show that wages fell and the unemployment rate was left unchanged.
All in all, today’s labor data hurts the belief that interest rates in the United States will be hiked before the end of the year. Furthermore, today’s data shows that the United States may not be immune to the global slowdown that seems to be affecting most other global economies. As we look ahead to next week, further US economic data will be carefully picked apart and analyzed by the market.
Manufacturing Data Also Disappoints
This week offered a lot of disappointment in the form of economic data from the United States, there is no denying that. A few days ago, a report from the Institute for Supply Management showed that factory output this past month fell behind. According to the report, a stronger US Dollar is affecting the outlook on US goods and is keeping foreign buyers at bay.
Basically, the fact that the Dollar is appreciating against most other currencies means that foreign investors are naturally going to be paying more for goods from the US than they would be for goods from most other countries. This is something that the Fed also has to consider before raising rates.
All in all, we are going to continue our focus on the interest rate speculation in the United States. The Fed’s October meeting is only a few weeks away and most are coming to terms with the fact that rates will be kept at their current levels. In the same breath, the Fed does love surprising the market, so I would not necessarily count an interest rate hike this month out of the question. The latest commentary from the Fed holds that rates will be raised at some point this year, though market conditions tend to suggest otherwise. Though it is unclear what the rest of the year will have in store, we do know that speculation will continue.