Gold and silver have had their most impressive 5-day session of the last few months this week. Not only did gold approach and subsequently cross over the $1,300 threshold, it is on the verge of surpassing the $1,325 mark as well. Silver performed in much the same way as gold, picking up well over a dollar this week and currently approaching $22.50/oz. While these impressive gains may lead one to believe that this week was full of bullish economic news stories and data, the reality of the matter is that this week has been generally quiet.
Some things that did take place this week, however, included a positive report on January imports and exports for China, the inaugural address to Congress given by the newly appointed Federal Reserve chairperson, as well as an updated, increased forecast on UK GDP growth for 2014.
US Equity Performance Confuses Some
For weeks now, market experts have been consistently claiming that US equities have officially run out of momentum. After witnessing the past few weeks play host to a number of massive stock sell-offs, investors have had enough and are rapidly losing interest in the increasingly volatile equity markets. Despite this, Wednesday and Thursday of this week saw US stock indexes make gains the market has not seen in weeks. While Wednesday’s massive gains were enough to impress most investors, US equities made solid gains again on Thursday.
While the massive gains posted by stocks during the middle stages of this week might usually prevent gold and silver from making any gains worth talking about, such was not the case this time around. Instead, both gold and silver were able to continue along their upward trends even though stocks too were performing well. While this may seem strange, it also speaks to the current strength of precious metals.
The market was seemingly back to normal on Friday, however, as US stock indexes began falling the second the opening bell rang. Now, market analysts are attributing Wednesday and Thursday’s stock market gains to one last isolated run before these same stock indexes correct themselves lower. We will have to wait until next week to see if stocks will continue to decline, but as investor risk-appetite diminishes, so too will gains by equities not only in the United States, but around the world as well.
This week’s only bit of market-relevant economic data came in the form of an import and export report for China. In January, the world’s second largest economy was credited with improving annual imports and exports by more than 10%. A more than 10% increase in annual imports and exports for January flew right in the face of market expectations of an increase of less than 1%. This was more than a positive Chinese economic report too, it was also the first positive such report the biggest Asia nation has produced in nearly a month. Though it didn’t have an overpoweringly positive impact on precious metals, it did give almost all raw commodities some sort of boost.
As we look ahead to next week, it is clear to see that the gold and silver bulls have the near-term technical momentum. The only thing on investors’ minds at this point is with regard to whether or not precious metals can sustain their recent upward trend as we head further into 2014’s first quarter.