Gold and silver spent a good majority of the week moving downward thanks to the belief that interest rates in the US will be hiked before the end of the year. Looking back on it, these past 5 days of trading have been fairly uneventful and have seen the investing marketplace pay attention to what the future of interest rates in the US holds.
Though this week was not plentiful from an economic standpoint, some data from China was delivered. There was also some news from Europe as the European Central Bank continues to mull over the idea of expanding easy money policies.
European and Chinese Markets Eyed
The early parts of this week, apart from focusing on the US economy, investors were talking about what the future might hold for European economic policy. Now almost a half year into quantitative easing policies with few signs of actual growth, the European Central Bank may be forced to intensify easy money policies. In a speech this week, ECB president Mario Draghi made comments that were perceived as giving an expansion of easy money policies the green light.
From China, this week brought about some economic data that was a bit better than expected. If you have been following Chinese economic data at all in recent history, you are more than well-aware of the fact that the data misses the mark more often than not. Industrial production during the month of October was not too far different from what it was during September, but on an annualized basis, the industrial production figures are up by nearly 2%. While this is good news, the overall tone of Chinese economic data the past 6 or so months has been anything but upbeat.
IMF Tells Fed to Not Move on Rate Hikes
The International Monetary Fund, in a letter that was published on Thursday, told the Fed that they should hold off on hiking interest rates for the time being. Citing a global economic slowdown and employment in the US that still has room for improvement, the IMF quite simply does not think that the Fed would be making a smart move by raising rates before the end of the year.
For the past few weeks, the market has more or less come to terms with the fact that rates very well might be hiked before the end of the year. That belief is proving to help boost the US Dollar and is pushing spot values downward. For the foreseeable future, I do not see the US Dollar doing much more than moving upward, forcing precious metals downward.
The near-term outlook for gold and silver is anything but bright as the general interest in metals is seriously lacking. With interest rates about to be on the rise, the US Dollar is making gains at every turn and that much is only working to add pressure to spot values.
Looking ahead to next week, the story will not change much at all. You can expect that investors will continue to focus on any and all economic data from the US. In addition to that, extra attention will be paid to any and all commentary emanating from the US Federal Reserve. For now, however, investors will continue expecting that interest rates are going to be risen before the end of the year.