Gold and silver are trading sharply higher as of the mid-afternoon on Friday, despite a number of factors seemingly working against them. This long week of economic data was finally rounded off by today’s April employment figures, which came back better than expected. In addition to the boatload of US economic data we received this week, the market was also greeted by a plethora of international economic data as well.
The crisis in Ukraine is renewing safe-haven demand for precious metals on Friday as it was reported earlier that the Ukrainian military is moving into a pro-Russian occupied town in the east. The reports are limited thus far, but we have heard of plenty of gunfire as well as reports of a Ukrainian helicopter being shot down. These reports are premature and have yet to be confirmed, but much like last week investors will be heading into the weekend apprehensive about how Ukraine will fare over the next two or so days. As it stands now, it appears that things in Ukraine will get much worse before they begin to get better, and this belief is what is driving safe-haven demand for metals.
US and World Economic Data Make An Impact On Precious Metals
Starting on Wednesday and carrying through to today, this week offered investors a lot of economic data to mull over. On Wednesday, the investing world was greeted by the first quarter GDP report for the United States. Investors, being as optimistic as they usually are, expected first quarter GDP to grow by more than a percentage point year on year. The GDP growth expected by the market was not even close to being met as the report indicated that year on year GDP growth for the US in the first quarter was only about .1%. Under normal conditions, this type of sub-par economic data would only work to benefit precious metals, but Wednesday didn’t offer normal conditions as investors were anxiously awaiting the conclusion of the latest FOMC meeting.
When the FOMC did finally bring their monthly meeting to a close on Wednesday afternoon it was reported that Quantitative Easing would be reduced by another $10 billion. The newest reduction to QE was widely expected to happen and ended up having little to no impact on the marketplace. What did put some downward pressure on gold, however, was the fact that the FOMC reiterated its positive outlook with regard to the strength of the US economy.
Finally, the week was brought to an end today after the release of April’s non-farm payrolls data from the US Labor Department. The report showed that more than 280,000 payrolls were added to the economy in April, far more than the 200,000-215,000 expected by the marketplace. This data ended up having a negative impact on the US Dollar which, in turn, helped gold and silver make the substantial gains they made today.