Precious metals ended the week in impressive fashion. In fact, this week as a whole ended up being fairly positive for precious metals as a whole. To be fair, there wasn’t much in the way of fresh economic data made public this week. This has a lot to do with the fact that this was, for many people, a holiday week. Thanks to that, trading activity lessened on a daily basis as the week wore on.
For precious metals, the past 5-day trading session was extremely upbeat because of safe-haven demand. The number of geopolitical concerns circulating across the global marketplace at the present moment in time is doing its part in keeping spot values elevated. We expect that this will continue through next week as many of these events do not seem to be going anywhere in a hurry.
From the onset of this week, investors in the US and all over the world began growing increasingly concerned about events in Asia, namely on the Korean Peninsula. According to most major news outlets, the US sent a naval fleet to the waters off of the Korean Peninsula in order to participate in joint-military exercises with the South Korean navy. As is typical when situations like this occur, North Korea was not too pleased and responded by threatening both the US and South Korea with military retaliation.
In fact, some lesser-known news outlets reported that Kim Jong-Un ordered the immediate evacuation of Pyongyang. This, if true, is being interpreted as North Korea preparing for large-scale war. In addition to this, there were also reports that Japan ordered the evacuation of its citizens from South Korea; another move that would suggest countries are gearing up for war.
In the Middle East, there are still lingering fears regarding what the future holds for the United States’ involvement in the Syrian civil war. This week, Russian and United States officials met to discuss this very topic. With tensions higher around the world, gold and silver have found a comfortable level of safe-haven support. That much will continue through the foreseeable future and spot values will continue to receive the same support.
After suffering through most of last week, the USD bounced back during the early stages of this week. Before long, however, the greenback began backtracking on account of some comments made from President Trump. Trump commented on the Dollar and said that it is too strong at the present moment. He said that if the Dollar continues to gain strength, this will be bad for economic growth. He isn’t wrong about this, as a rising Dollar makes US exports more expensive for other countries.
In the immediate wake of his comments, the Dollar lost ground and gave precious metals ample room to move forward. Trump then went on to say that he thinks interest rates should be kept at their present levels. This was an interesting move because it is traditional that the President refrains from talking about the moves made by the Federal Reserve.
All in all, however, this week was and continues to be dominated by geopolitics. Global tensions are at an all-time high, and investors are reacting accordingly. Until we see a significant reduction in the tensions around the world, gold and silver are likely to continue to receive nice boosts. Next week, as people return from their holiday breaks, I anticipate that a good bit of Q1 2017 economic data will be dealt. Still, unless this data is overly upbeat I anticipate that precious metals will still benefit from the safe-haven demand that is currently running rampant.