For yet another week, both gold and silver will finish the day on Friday having posted weekly losses. Though silver’s spot value will end the week far from its weekly low, the losses the metal has incurred are beginning to pile up, and quickly too. Gold, on the other hand, is looking like it will finish the week not too far from its weekly low. As it stands, the technical posture of precious metals is looking particularly weak.
In all, the last 5 days did not play host to too much in the way of impactful economic data. Though we did receive a bit of economic news, very little of it had a major impact on the market. As such, investors the world over turned their focus to equity and currency markets. In addition to this, there were a few surprise moves made by global central banks which made the phrase “currency wars” known to even more investors.
Central Banks Continue to Slash Rates
For the better part of the last year or more, we have seen central bank after central bank slash interest rates or make other policy decisions aimed at spurring economic growth. Beginning this week was the bond-buying initiative of the European Central Bank, known as quantitative easing. First established and put into effect in the US, QE sees the purchase of sovereign bonds by a central bank a means of pumping an economy full of cash in order to spur growth. It is still far too early to tell if QE will have a successful impact on the EU economic system, but most market experts are feeling optimistic.
Just today, in other news from Europe, it was announced that Russia’s central bank slashed its primary interest rate for the second time in less than 3 months. Pushed downward from 15% to 14%, Russia’s main interest rate is one of the most active in the world. In fact, after announcing the most recent rate cut, Russia’s central bank said that more are going to come in the near future. As such, we will continue keeping a close eye on what is happening both across Europe and in Russia.
Poor US Economic Data Mostly Overlooked
What little economic data has been made public this week came on Thursday and Friday in the form of a few reports from the United States. On Thursday, the Labor Department announced that weekly jobless claims for the week ending March 7th fell by more than 35,000 to a new 3-week low of just under 290,000. Citing poor weather and a host of other factors, experts are saying that the last few weeks’ worth of 300,000 jobless claims or more are a minor hiccup and not indicative of a weakening labor situation in the United States.
Today, the latest Producer Price Index was made public, and instead of the expected .5% increase, the index actually declined by two-tenths of one percent. This report was quickly followed by a February retail sales report that saw retail sales during February decline by .6% from January. Making matters even worse is the fact that December to January’s retail sales declined by .8%.
Though these numbers are somewhat concerning, the fact that the US has just gotten through a fairly rough winter (see: Boston’s record-breaking snowfall) more or less explains why retail sales are lagging. Now that the weather is beginning to get a little nicer, it is widely expected that March’s retail sales will be far superior to those of the last few months. Still, anything can happen between now and the end of the month, so we will just have to wait and see what takes place.