Precious metals finished November and kicked off December rather poorly. The week started off slow, but thanks to the release of a few pieces of crucial economic data things quickly picked up. In addition to the aforementioned data, there was also a rather significant development as far as the global crude oil market is concerned. At the end of the day, however, almost all of this week’s developments, whether it be economic data or otherwise, ended up working against precious metals.
US Q3 GDP Growth Beats Expectations
One of the first news stories of this week, and also one of the biggest, was the release of the 3rd quarter GDP growth for the United States. Most experts were anticipating rather strong growth, but the actual data ended up beating these expectations. According to the US Department of Commerce, this year’s 3rd quarter saw the US economy grow by 3.2% on an annualized basis.
The GDP data was complemented by upbeat import/export data as well. All in all, this early week data set the tone for precious metals through the rest of the week. It bolstered the belief that the FOMC will raise rates this month and that is something that has constantly been weighing on metals.
OPEC Reaches Production Cut Deal
For the last few weeks, the investing world was anticipating an OPEC meeting due to the fact that the meeting was set to center on the possibility of implementing a production cut. Though the major oil cartel has previously discussed cutting production in an effort to reduce a global supply-glut, none of these previous meetings have resulted in any tangible deal.
This week proved to be different as, apparently, OPEC member nations have agreed to reduce the daily production of crude oil. Very few details have emerged with regard to how big the production cut will be, but we have received confirmation from multiple sources that a production cut is imminent. An interesting facet of the deal is that it is rumored to include non-OPEC nations as well. With these countries cooperating, it finally seems as though we might be closer to reducing the oversupply of crude oil that has been plaguing the market for a while now. In the immediate wake of this announcement the spot value of crude oil jumped upward. Though an increase in the price of crude oil is something that typically pushes gold and silver higher, such was not the case this time. This is likely due to the fact that there is a good bit of risk-appetite abounding across the global marketplace thanks to Donald Trump’s election as well as the fact that almost everyone is convinced that interest rates will be hiked before the month and year come to a conclusion.
Jobs Data Released
For a second consecutive week, the number of people filing for first-time unemployment benefits has jumped upward. Though we are still more than 30,000 under a seasonally-adjusted 300,000 claims, the fact that claims have risen for 2 consecutive weeks is a bit unnerving for some. Still, this data did not end up having too much of an impact on the market.
Also, to close out the week we were dealt the non-farms job growth report for the month of November. According to the US Department of Labor, the total number of non-farm jobs added to the economy in November was 178,000. Though this was slightly lower than the 180,000 that was projected, it was interpreted as being more or less in line with expectations. As such, gold and silver were not able to benefit and interest rate hike expectations were sustained, as they have been. As we look ahead to the first full week of December trading, you can expect that interest rate talk will continue and more than likely heat up as the December FOMC meeting inches closer and closer.