Precious metals made significant strides forward this week thanks to continued investor concerns relating to global market conditions. We have seen over the last few weeks equity markets that seem to be diving at every turn. What’s more, the US Dollar has taken a dive in recent days, and this is something that is causing investors to worry. All of these worries and concerns are driving safe-haven demand for precious metals which we have seen in the form of rising spot values this week.
Gold and silver gained at almost every turn this week due to a multitude of issues working in their favor. On Wednesday and today to close out the week some mild profit-taking brought spot values back down again, but it is clear to see that at the present moment in time precious metals have a lot of momentum.
Helping precious metals even more this week was the fact that a meeting between Saudi Arabia and Venezuela produced no real results. As you might have expected, the meeting centered around what can be done to prevent the spot value of crude oil from falling even more than it has already. When all was said and done at this meeting it became very clear that neither side wanted to take the necessary steps to curb the production of crude oil; of which is causing and exacerbating the current supply-glut that we have been witnessing for months now. With Iran oil production into full-swing, the overriding concern amongst investors is that the price of oil will be driven even further downward over the coming months. While crude oil often dictates the price action of gold and silver, it is now working inversely. The fact that oil continues to fall is worrisome to investors around the world, and to safeguard against this worry we are seeing an increase in safe-haven interest in precious metals. It will be interesting to see how far this current momentum can take metals, or if we are due for a larger corrective pullback to open up next week.
This week was not very fruitful from an economic data standpoint, but Thursday brought about a bit of employment data that is worth talking about. For one, weekly jobless claims last week fell by more than 15,000 to bring the seasonally-adjusted average back below the all-important 270,000 mark. Perhaps more importantly, the 4-week moving average of jobless claims backed off by more than 3,000 last week. The 4-week moving average is always viewed by investors as a more accurate snapshot of how the employment sector is doing at a given moment in time, so it is nice to see things backing down after a few worrisome weeks.
It will be interesting to see what happens to the US employment sector over the coming months should the state of the global economy remain as it has been recently. If most major sectors of the economy begin slowing down, it is difficult to believe that employment will remain strong. For now, however, we are witnessing a US employment scene that is the strongest it has been in years. Whether or not this strength can be sustained is what investors will really be looking into as the days and weeks fly by.
Another focus going forward will be, as it has been for some time now, on the price action of crude oil. The commodity has been dictating what is happening across the global economy for the past few months and there seems to be little to no let-up in sight.