Precious metals had a rought start to this week, but things normalized a bit by the time markets came to a close on Friday. To be completely blunt, this week did not bring about much in the way of fresh economic data and really saw investors focus on many of the same factors that have been making headlines for weeks now. For gold and silver this is good news because it means that upside potential is still there and that prices may continue to rise through the coming weeks.
There were a few pieces of US economic data due out this week, but few were more important than the weekly jobless claims report which was released on Thursday. Officially, first-time claims for unemployment benefits fell by more than 7,000 last week, adding to a more than 10,000 decline recorded a week earlier. This leads many to believe that the US employment sector is growing stronger and stronger. Adding to the good news was the fact that, for a second straight week, the 4-week moving average of unemployment claims has ticked downward. Now, the seasonally adjusted average of unemployment claims sits just above 260,000, which is a drastic improvement from a few weeks ago where it was edging in on 280k.
On Friday, another report was released that showed consumer prices in the United States in January ticked upward a bit. This bit of data was unexpected for a number of reasons, but mostly because experts were anticipating that January’s CPI would show poor data. As if the price rise was not enough, it was additionally encouraging to see that consumer prices rose across the board, rather than in one sector or two. Electronics, durable goods, and even clothing all saw modest price upticks as a result of producers looking to get a bit more of that extra spending cash that Americans seem to have nowadays. With all of the tumultuous economic activity that has taken place over the last few weeks, it is quite surprising to see such upbeat data from the United States. Now, the prevailing belief is that perhaps the US economy is not performing as poorly as thought a few weeks ago.
For investors, the next and biggest question is what direction gold and silver will be heading now that we are quite sure that interest rates will remain put for some time now. In remarks made last week, members of the Federal Reserve have commented that they are in no rush to raise interest rates. While before the turn of the New Year most people were anticipating that rates would be raised incrementally throughout the year, that much does not seem like a guarantee anymore. This is great news for precious metals because it means that investors are going to be placing more interest in them. With how unstable the global economy is at the present moment in time, we are seeing investors have no choice but to seek out the safe-haven qualities of gold and silver.
Looking ahead to next week, there isn’t much on the slate as far as markets-moving economic data is concerned. With that said, however, gold and silver are still holding on to some momentum that will hopefully be enough to open up next week positively. Even though this week ended up being a wash for metals, both gold and silver have been performing at levels we have not seen in many months.