After holding steady for most of the week, precious metals have spent most of Friday on a rapid decline. The reason for this is due to the fact that today’s unemployment report showed job growth in September that handily beat market expectations. Though there was much more going on this week apart from today’s employment data from the United States, few other happenings during this 5-day trading session had enough pull to really move spot values too drastically.
One of the biggest events this week began last weekend and is still occurring as of the writing of this post. In Hong Kong, protesters have taken to the streets in order to protest what is being labelled a lack of democratic reforms. The demonstrations, which are comprised mostly of college students, have remained mostly peaceful, but the leaders of the protests have maintained that they will not stop until top city officials step down from their posts. While the protests have remained mostly peaceful, the fact that such unrest is happening in the financial capital of the world is unsettling for investors and has taken its toll on global equity markets.
Prior to this 5-day trading session ever even kicking off, there was no denying that the most highly anticipated event of the week would come today in the form of the US Labor Department’s monthly employment report from September. As is always the case, investors were looking to use today’s data as a means of gauging the current strength of the US economy. In the lead-up to today’s data release, investors and market experts alike were expecting somewhere in the neighborhood of 215,000 jobs to be added to the US economy. The actual data, however, showed that nearly 250,000 non-farm payrolls were added to the economy during September.
As you could have probably guessed, this data ended up boosting the selling pressures being faced by gold and silver. As a result, spot gold fell below the $1,200 threshold while silver dipped below $17/ounce. Now, with the marketplace only growing increasingly bearish, it is going to b extremely difficult for precious metals to find any support. While the unrest in Hong Kong has provided a bit of underlying support, the reality of the matter is that it is not enough to boost spot values much at all. Looking ahead to next week, I expect the market to continue reacting to the news they were dealt today. As such, the immediate future does not look all that promising for gold and silver.