On the final day of this trading week, precious metals are conceding value due to a stronger US employment report from January. All in all, this week has been quite slow and other than economic data did not yield too much in the way of noteworthy stories.
Precious metals, as of the writing of this post, are looking like they will be posting weekly losses for a second consecutive week. This is mostly due to a stronger US Dollar that advanced against a number of rival currencies thanks to some surprise central bank decisions.
Big Central Bank Decisions Catch Market Off Guard
This week, while being mostly devoid of major economic data, saw a few central banks make somewhat surprise decisions regarding monetary policy. First was the Australian Central Bank who, on Wednesday, announced that it would be slashing its main interest rate in an effort to stimulate the beleaguered economy. Of course, as you might have expected, this news almost immediately pushed the Australian Dollar down to a 5.5 year low against the US Dollar.
In other central bank news this week, it was reported that China’s central bank reduced the reserve requirement ratio for domestic banks. This move, like most central bank actions in recent weeks, was made in an effort to stimulate the Chinese economy.
Unless you have been living under a rock, you are well aware that China’s economy is now only a shadow of what it was a little more than a year ago. While 2015 is expected to be a year of growth for the country, growth estimates are disappointing when you look at what the Chinese economy does during a typical year. Still, yesterday’s Chinese central bank decision provided gold and silver with a bit of a boost.
US Employment Report Beats Expectations
Due to this week being so incredibly slow from an economic standpoint, it is no wonder that the biggest happening of the week came today in the form of the most recent employment report from the United States. Compared to expectations of more than 235,000 non-farm jobs being added last month, the actual figures showed that just shy of 260,000 new jobs were created.
This news almost immediately sunk precious metals and made way for a positive end of the week for gold and silver.
Despite today’s upbeat jobs figures, the real question on the minds of market analysts remains whether or not wages will begin to move upward. Recently, all of this positive job growth in the US has been offset to an extent due to the fact that wages are growing at a snail’s pace. As we head further into this year, wage growth will continue to be a top concern for investors of all types.
Looking ahead to next week, I anticipate that we will be given even more January economic data not only from the United States but from Europe as well. AS always, these pieces of data stand the chance of affecting the precious metals market considerably.