Precious metals did not really perform well for much of any of this past week. The fact of the matter is that global markets are in a very bearish state for metals right now, and so long as that persists it is going to be nearly impossible for precious metals to make any substantial, large moves forward. This week saw gold and silver show some positive signs, but by week’s end metals were still trending near multi-month lows.
For the most part, this week was typical of the one leading up to the Christmas holiday; trading activity was subdued and reactions to data were muted. Though it was not expected that this week would bring about all that much in the way of economic data, we did receive a few key pieces of information that will be of interest to investors now and when they return from holiday breaks.
European Terrorism Does Little for Safe-Haven Demand
Earlier in the week, there were two shocking headlines coming from Europe with regard to acts of terrorism taking place there. In Berlin, a large truck was maliciously driven into a seasonal market, killing a little more than ten and sending dozens to the hospital. The attacked is said to be from the Middle East, but had been in Europe for the past few years.
In a separate attack, this time in Ankara, Turkey, a lone gunman was seen shooting to death a Russian diplomat while he was giving a speech in front of a small crowd. The killer, a Turkish police officer, began shouting phrases that were sympathetic to the crisis going on in Aleppo, Syria currently. Though it is believed that both of the aforementioned attacks were inspired by ISIS, they are not said to be orchestrated by the Middle Eastern war machine. Instead, these are said to be lone wolf attacks, where an attacker, inspired by radical texts and speeches, acts on his own accord.
With all of this violence taking place, it may seem strange, but there was almost no reaction on the part of investors. Normally, you might think that things like this would lead to a spike in safe-haven demand for gold and silver, but that much did not happen. Instead, the news was taken in stride as investigations are still ongoing.
US Economic Data Dealt
Thursday was a big day for economic data in the United States for a number of reasons. First and foremost, the weekly jobless claims data spiked upward by far more than anyone had anticipated it might. Officially, last week saw the number of first-time claims for unemployment benefits skyrocket upward by about 21,000. This brought the seasonally-adjusted annual number of weekly jobless claims up to 275,000. Considering expectations were for that number to not eclipse 260,000, it is easy to see why the data is being perceived as overly poor. The only takeaway from this data is the fact that we have now gone 94 consecutive weeks without the seasonally-adjusted number of claims touching or surpassing the 300,000 mark. With that said, we are flirting with ending that streak should next week’s data at all mimic what we saw this Thursday.
In other US economic news, it was reported that the US economy grew by 3.5% during the third quarter of 2016. Initial estimates had claimed that the economy grew by about 3 tenths less than that amount, but it turns out that consumer spending, amongst other factors, was stronger than initially thought. This did well to offset a November durable goods orders data point that really missed the mark. As you might expect with this being a holiday week, the overall reaction to the GDP and durable goods data was more muted than anything else. If anything, the upbeat 3rd quarter GDP data does well to prove that the Fed made the right decision in hiking interest rates the other week.
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