Precious metals finished the week better than where they started thanks, in large part, to gains made in the wake of the FOMC minutes from their most recent meeting. As for the week as a whole, there really wasn’t all that much action to speak of. Very little in the way of economic data was released, and investors instead had to be content with speculation over the future of certain geopolitical situations as well as of interest rates in the US.
A major takeaway realized during the early parts of the week was the fact that, despite a stronger USD, gold and silver were able to hang tough. Analysts commented on the situation and suggested that due to the increasing safe-haven demand across the global marketplace, gold will be able to withstand a stronger greenback.
Something worth noting due to its impact on the aforementioned safe-haven demand is the fact that Marine Le Pen is currently expanding her lead in France’s presidential race. This is a big deal mainly because of the campaign promises that Le Pen is making. Amongst these, the biggest is her commitment to getting France out of the EU. She has repeatedly stated that France will have a referendum much like what happened in the UK.
Just as it was in the lead-up to Brexit, the promise to leave the EU is something that breeds a lot of uncertainty amongst investors in Europe and around the world. Knowing this, it becomes a bit easier to see why many people are likening Le Pen to US President Donald Trump. This is a situation we will continue to follow until the elections are held in mid-Spring.
Weekly jobless claims were on the rise as the US Department of Labor reported that last week saw a 6,000 increase in the number of people claiming first-time benefits. This brought the seasonally-adjusted average to 244,000. It is never good to see a rise in the number of people filing for unemployment, but the rise was not very large, and we are still well below the pivotal 300,000 threshold for seasonally-adjusted claims. In fact, we are now at 103 consecutive weeks where the seasonally-adjusted average has been below 300,000.
The weekly jobless claims data was not finished there, as it was reported that the 4-week moving average of claims actually backed down by 4,000 claims. This is significant because the 4-week moving average is considered to be the most accurate and current reflection of how the labor market is performing. All things considered, employment seems to be strong in the US and getting stronger all the time.
Perhaps the most anticipated happening of the week came in the form of the release of the minutes from the FOMC’s most recent meeting. As expected, the minutes showed a Fed that was confident in the strength of the US economy, but still hesitant to rush into further interest rate hikes. One of the biggest reasons for this reluctance is the fact that Donald Trump’s fiscal policy still remains a mystery.
We have been appraised of potentially massive tax cuts on individuals and businesses, but there have been nothing in the way of specifics released. Until the Fed is able to gain a better idea as to what the future of fiscal policy in the US will look like, they are not going to be in a hurry to push rates higher. As it stands right now, consensus expectations are calling for the next rate hike to happen sometime in the late Spring or Early Summer. More specifically, June is looking like the most likely month for rate hikes to occur. Of course, that is subject to change as economic and political factors do.