For the first time in more than a week, spot gold and silver are both trading sharply higher. The lack of bullish news for metals had been weighing on spot values for the past week or more, but a weaker than anticipated jobs report for March coupled with depressed prices fueled some demand for metals. In all, this week offered investors a boatload of economic data and was a nice change of pace from the uneventful week we had to finish off March.
Despite most of the week being dominated by US economic data, investors had their eyes on Europe on Thursday due to the European Central Bank’s most recent policy meeting. With deflation concerns growing throughout Europe, the wider investing community was interested to see what actions, if any, the ECB would take to ease the deflation worries.
March’s Jobs Data Disappoints
As soon as markets opened on Monday, investors were being given plenty of US economic data to talk about. Having said that, however, it must be noted that most of the early week economic data was overlooked by investors who were instead of focusing on today’s non-farm payrolls data for March.
In the lead-up to the jobs data being made public, the general consensus among the investing community is that they would like to see at least 200,000 payrolls added to the economy. In all actuality, Janet Yellen and James Bullard’s upbeat remarks with regard to job and economic growth in the US made investors think that the 200,000 payroll addition estimate might even be on the low side. This morning, however, investors were surprised to see payroll additions for March come in at 192,000. This data gave gold and silver a boost while shaking the confidence investors have in US equities. Currently, equities are posting mixed reactions to the jobs data while gold and silver spot values continue to climb.
As a result of the payrolls data, the unemployment rate is holding steady at 6.7% instead of falling to 6.6% like so many had expected. This data is so far working in gold and silver’s favor but market bears are still very much in control.
European Central Bank Holds Steady, Rates Remain Unchanged
Earlier this week, investors were greeted with producer price index readings for China, the US, and the European Union. Of these three PPI reports, none was more important to investors than that of the EU’s. According to the PPI report, the EU’s producer price index declined by .2% in February and was down by nearly 2% on an annualized basis. Officially, the EU’s PPI was down 1.7% year on year, the largest such decline in nearly 5 years. This news did nothing but add to already growing worries of deflation across the EU and boost speculation with regard to what, if anything, the ECB plans to do in order to combat falling prices across the region.
When the European Central Bank concluded their meeting on Thursday, it was announced that no major changes to policy or interest rates would be made. While speaking to the press after the meeting, ECB president Mario Draghi said that even though they have not instituted any new monetary stimulus measures this time around, measures similar to Quantitative Easing are not out of the cards by any means. It seems as though leaders of Europe’s central bank want to see more telling signs of deflation before they make any moves to combat it. For this reason, we can expect the investing world to pay close attention to any and all economic developments across the European Union.