Gold and silver faltered towards the beginning of the week, but by week’s end both metals were making impressive gains thanks to a number of outside factors. All in all this was a fairly eventful week even if central bank meetings did not exactly live up to expectations. Unlike what we witnessed towards the end of last week, gold and silver are heading into the weekend with some nice momentum. This is especially crucial because it is looking like metals will end the month in an upbeat position.
Next week will be an important one simply because of the sheer quantity of economic data that is expected to be released. Among those pieces of data are the job growth report from the month of April. If this data comes back weaker than expected the marketplace is likely to react in a way that might give gold and silver even more of a boost.
BoJ, Fed Do Not Alter Monetary Policy
Two major central bank meetings took place this week and both of them yielded no changes to monetary policy in either country/region. First was the FOMC meeting which took place from Tuesday to Wednesday, wrapping up on Wednesday afternoon. It was not widely expected that the Fed would move to alter monetary policy in any way, shape, or form, and that is exactly what happened. The Fed decided that they would not touch interest rates and offered few clues as to when that might change.
The Bank of Japan held their monthly policy meeting on Thursday and unlike what it was with the Fed, most people were anticipating that the BoJ would change their current monetary policy. Right now, Japan is currently pursuing a monetary policy that is similar to Europe’s. Right now, the BoJ is looking to devalue the Yen in an effort to boost spending. Unfortunately, Japan’s central bank decided against making any changes to monetary policy and this only worked to help bolster the Yen.
Against the Dollar, the Yen put forth its best performance since 2008. All in all, the Dollar concluded the week having lost more than 4% of its value against the Yen and is not looking like it is going to improve in the near future. If the Dollar’s weakness continues upon the opening of markets next week, gold and silver very well might move to new highs.
US Q1 GDP Fails to Impress
After finishing the 2015 calendar year having a solid three months of growth to reflect upon, the US economy was looking like it would begin the year in impressive fashion. Unfortunately, that proved to not be the case as Q1 GDP growth failed to impress.
Officially, the US GDP grew by just less than .5% on an annualized basis. When compared to Q4 (2015) growth of more than 1.4%, it is easy to see why the first three months of this year missed the mark. The biggest contributing factors to this first quarter’s weakness were that both consumers and business were seen spending less money. Being that other economies around the world are performing poorly, it is easy to understand why Americans and American businesses are not spending as much. It will be interesting to see if this trend continues through the middle parts of the year because if Q2 growth is as weak as what we witnessed from Q1, we are going to have a tough time posting any solid growth by year’s end. All of this confusion and data is doing one thing—help gold and silver make gains thanks to increased safe-haven demand.