Gold and silver began this past week by posting some moderate gains before falling back down come Wednesday and Thursday. All in all, this week did not offer up much in the way of fresh economic data strong enough to alter the attitude of global investors. For precious metals, this is not such good news because current market conditions are such that interest in precious metals is very limited.
While there were not very many data points coming from the US economy, China brought about some talking points that kept investors busy for part of the week. Looking ahead, the attention of the global marketplace is quickly shifting to next week’s FOMC meeting where it is widely expected that interest rates will be hiked for the first time in nearly a decade. Apart from the expectation that interest rates will be raised in the wake of next week’s meeting, there really isn’t much that investors are preparing themselves for.
Chinese Data Continues to Disappoint
As for economic data released this week, there was a bit of key Chinese economic data released from the month of November. Officially, the Chinese government reported that exports during the month of November fell by almost 4% on an annualized basis. The decline in exports was bad enough, but it was made even worse due to the fact that this was the fifth consecutive month when exports out of China declined. Imports were down as well, and the overall tone of economic data from China continues to be as poor as it has been all year.
As we look forward to the rest of December, it is widely expected that Chinese economic data will continue to be poor in nature. Thanks to this, there is a widespread belief that the slow growth, or complete lack of growth, on the part of the Chinese economy will have a spillover affect that ends up tarnishing overall global economic growth. That much, however, remains to be seen.
US Jobless Claims Rise Unexpectedly
After the end of last week brought about a November employment report which saw more jobs than were forecast added to the US economy last month, this week brought about a weekly jobless claims report which showed that more than 13,000 new claims for unemployment benefits were filed last week.
This bit of data was slightly unnerving thanks to the fact that most experts were expecting to see no less than 5,000 fewer unemployment claims. Truth be told, this week’s report on unemployment benefits did not have that much of an impact on the way investors feel regarding the expected interest rate hike announcement we are anticipating to be made next week.
Another key theme for this week was the fact that crude oil fell to a fresh 7-year low, below $37/barrel. So long as this leading commodity continues to suffer, it is unlikely that precious metals will make much in the way of sustained gains. You see, precious metals tend to follow in the footsteps of crude oil and with a supply-glut currently plaguing the global market crude oil only looks like it will continue to lose value. This is going to be especially true if Iranian crude oil is allowed back on Western markets. Though it isn’t written in stone, embargos on Iranian oil are thought to be on their way out in the very near future. If that does happen, there is no saying just how far precious metals might slide.