Precious metals are going to end the week in a worse position than they were when the week began, but gold in particular took a beating. In fact, this week proved to be the worst 5 day trading session that the yellow metal has seen in almost 2 months. Even with some weaker economic reports trickling in through the latter half of the week, metals could not seem to gain much of any ground.
As you could have probably guessed, there are not many surprising factors affecting the movement of precious metals. While, for most of March, weaker stocks and a weaker greenback came to the aid of metals, the two aforementioned asset classes have seen their posture improve over the past week and a half or so. This, combined with easing geopolitical tensions, has not done gold nor silver many favors.
Being that we are just about 1/3 of the way through 2017, this week was always going to bring about some great talking points. The reason for this is due to the fact that so many quarter-end pieces of economic data were made public. Of all the reports that were dealt over the past 5 days, few are viewed as more important than the United States Q1 GDP data, which was released on Friday.
According to the data, the level of growth experienced by the US economy from January through March was not quite what most people were anticipating. According to some of the first estimates published, year over year growth for the US economy during the first quarter came in at just .7%. Though this number, in and of itself, is not terrible, it does well to undermine the more than 2% growth realized during the final months of 2016. If these estimates do hold true, 2017’s first quarter will be the slowest first quarter of growth in more than 3 years.
Royce Mendes, of CIBC World Markets, commented on the US GDP statistic by saying, “The US economy appears to have hit a bump in the road during the first quarter of the year. But that’s nothing new, a number of Q1’s have posted weak growth figures only to rebound over the subsequent quarters. Overall, the numbers today don’t look particularly good, but we’re willing to look past it with seasonal adjustment issues still likely prevalent.”
Folks may be optimistic about the future, but the current snapshot of the US economy is a good bit bleaker than most people were anticipating. Despite this, precious metals were not really able to pick up much of any lost ground.
As we look ahead to next week, there is a lot that investors will be paying attention to. Perhaps more important than any other piece of economic data is the jobs report from the US for April. As of right now, expectations are middle of the road in that no one is expecting overly robust data at the same time as very few people are expecting to see overly downbeat data.
Sean Lusk, of Walsh Trading, commented on the importance of next week’s jobs data when he said, “We’ll see what the Fed has to say. If inflation is not where it needs to be, that is going to tell the market we’re not going to have any further tightening any time soon. However, if inflation gauges have picked up and they like what they’re seeing in the economy, then it’s going to give more thought to rate hikes down the road and really support the U.S. dollar.”
It may not seem like it right now, but the marketplace is really on edge with this jobs data on deck. Interest rate hikes are hanging in the balance, and investors will be looking to big data points like this for signs as to what the future might hold.