Precious metals are going to end the week in lackluster fashion and, in many ways, investors could not be happier to see this week come to a close. From a precious metals perspective, this week, though slow, did not bring about much as far as fresh, fundamental data is concerned. In fact, the data points that were made public this week ended up working in direct opposition to gold and silver.
As we look forward to the next few weeks, it is not looking good for gold nor silver. Barring some unexpected news, or a shift in the sentiment of the Fed, metals are looking like they will have a tough go of things over the course of the next month or so, at least.
Metals Hurt by Rate Hike Talks
Ever since the latter part of last week, precious metals spot values have been gripped by the fact that the interest rate hike outlook in the United States has changed completely. If you rewind the clock only ten days, you will have seen a marketplace that was far from convinced that rate hikes would be taking place at any point in the near future. Then, late last week, the minutes from the FOMC’s most recent meeting were released. Among other things, the minutes showed that the Fed is very much in favor or raising interest rates again in June. Though we have heard that the Fed is intending on raising rates before, this time seems a bit different.
For gold and silver, this week did not offer any respite from the losses incurred as a result of the overriding belief that interest rates will be hiked as a result of the June FOMC meeting.
Losses incurred by precious metals may seem dramatic and never-ending, you have to keep in mind that both gold and silver have performed extremely well, and well above expectations, ever since the turn of the New Year. In fact, metals were already beginning to perform well before 2016 ever arrived. So while it may seem like metals are performing poorly, many are looking at it as a balancing act coming after a period of 3 or 4 months where interest rate hikes were very far back in the minds of investors everywhere.
US Economic Data Beats Expectations
Though this week was extremely light in a variety of different ways, there was some US economic data dealt on Thursday. For one, the weekly jobless claims report came back far better than expected and did well to quells fears that the US employment sector is struggling. In fact, this now marks 2 consecutive weeks where jobless claims outperformed expectations. This is good news because, barely 3 weeks ago, investors were dealt a confusing batch of jobless claims data that did well to confuse the marketplace from top to bottom. Luckily, it seems as though things have gotten back on track.
In other news, durable goods orders for April moved upward by far more than expected. This marks a few consecutive US industrial reports that have beaten expectations. As you might have expected, what this really does is lend more credence to the belief that interest rates will, in fact, be hiked come the end of June.
For precious metals, it will be interesting to see if any respite can be offered. It does not look like any real bullish news is on the horizon, but the marketplace can change in a hurry from day to day. Despite all this, gold and silver are really going to find it hard to make gains so long as the greenback is performing as well as it has been lately. All in all, the current situation facing metals is one that grows increasingly bleak by the day.