Even though it was mostly unexpected, precious metals managed to turn this holiday week of trading into one of decent gains. From the outset of the week, both gold and silver began moving upward and really did not look back. Helping facilitate these gains was the fact that crude oil prices remained elevated while the US Dollar backtracked by a good bit. There were a few pieces of noteworthy economic data from the United States, though due to the light amount of trading activity we have seen this week, it was mostly overlooked.
Light Batch of Economic Data
Perhaps the most significant piece of economic data that was dealt this week came in the form of the most recent weekly jobless claims report. If you can recall, last week saw seasonally adjusted first-time claims for unemployment benefits jump up to 275,000. Though, objectively, this figure is indicative of a strong labor market, it also marked the closest we have gotten to the 300,000 figure in 94 weeks. Though no one was losing any sleep over it, there was some concern that this week would see that seasonally-adjusted average inch ever higher.
Yesterday, however, exactly the opposite happened as it was reported that first-time unemployment benefit claims fell by 10,000, to a new seasonally-adjusted average of 265,000. This was more or less in line with expectations, and marks 95 consecutive weeks where jobless claims remained below the 300,000 threshold.
Earlier in the week, there was another upbeat piece of economic data dealt out of the United States. This time, the report came in the form of the latest reading on consumer confidence as interpreted by the US Conference Board. Despite this week not expected to be the source of any crazily significant economic data, Tuesday brought with it the shock of the week. According to the US Conference Board, December’s US Consumer Confidence Index reading jumped up above 113—the best reading we have seen in quite some time. Though most people were quick to attribute this reading to Donald Trump’s election to the seat of President of the United States, the Conference Board said that that had a very small impact on the upbeat reading. Regardless of the causes, we can take solace in the fact that the US economy is performing quite well, and it seems as though that is something that will be carried into the New Year.
Dollar Backs Down
From the onset of the week, the US Dollar was losing value at seemingly every turn. The Japanese Yen, in particular, made some nice gains against the greenback. For many, the reason behind the Dollar’s weakness this week has to do with nothing more than the fact that its rally might finally be coming to a close. Ever since early November, the Dollar has been performing very well, fueled not only by the FOMC’s decision to raise rates, but also general optimism with regard to what the future holds for the world’s largest economy.
For gold and silver, as you might expect, the Dollar moving backwards was something that greatly benefited gold and silver. In addition to the Dollar backing down, crude oil prices remained elevated. This one-two punch of sorts was enough to keep metals on the up and up throughout most of the week.
With all that being said, investors—what few there are this week—have been showing concerns with regard to the production reduction deal reached by OPEC a few weeks ago. Many people are under the impression that the deal, which also involves non-OPEC oil-producing countries, is going to fall through before it goes into effect on the 1st of January. If it doesn’t fall through, those same people think that certain countries will not cooperate, which is something that will ultimately compromise the deal and likely push crude oil values lower. With that being said, it is clear to see what one of the major focuses for investors will be during the early parts of next week.
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