For the first time in a few weeks it is looking like both gold and silver will end the 5-day trading session having posted decent gains. After starting out the week mostly moving sideways, metals benefited from a few different unfolding scenarios, including the latest FOMC meeting, which was held and wrapped up this week. While we did receive some light economic data, this week, on the whole was not marked by a lot of economic talking points.
Looking ahead to next week, I imagine that things will resemble this week closely. There will be a bit more economic data to talk about, but the reality of the matter is that none of these data points are expected to impact the market in any major way. Instead, investors will continue to focus on things like equity and currency markets.
USD Index Topping Out
For the last two weeks, we have talked about the USD Index on a number of occasions. More often than not, the greenback was making headlines due to the fact that it was making such massive gains against the Euro currency. After hitting two 11.5 month highs and a 12-month high over the past 2 weeks, it seems as though the Dollar has, at least for now, reached a market top.
For gold and silver, the USD Index’s pullback over the last few days has helped spot values considerably. Now, for the third day in a row, gold’s spot value has added more than 15 dollars while silver has made consistent gains of more than 25 cents. In fact, today saw silver add more than three-quarters of a dollar to its value, bringing it just shy of the $17/ounce threshold. As we head into the weekend, it will be interesting to see if metals can retain their current standing, or if such a spike in gains will prompt profit-taking, chart consolidation, and other investor moves that will inevitably bring spot values back downward.
Greek Reforms Leave Austerity Out of the Mix
A story that has been mostly flying under the radar this week has to do with Greece’s new government and the proposed reforms it plans on making. In the lead-up to the release of these reforms, most people were under the impression that multiple austerity measures would be included, but such has proven to not be the case. Instead, the list of reforms, which has already been submitted to European partners, was based on a similar list that was put forward not too long ago.
Though this round of news regarding Greece did not mention their possible exit from the European Union, that much is still on the table. Before long, I anticipate that we will be hearing about Greece’s economic and financial troubles, especially as they relate to previously agreed upon EU bailout measures.
Another bit of news from this week was the release of the weekly jobless claims report, but the number of claims did not move too far from where they were a week ago. As a result, the market did not have too much of a reaction to what the Labor Department’s report had to say. By this time next week, we will already be looking forward to March’s employment data from the US. Because so many people are expecting interest rate hikes sometime around June, each monthly employment report from here on out will carry just a bit more weight than the one before it.