This week has been an interesting one for precious metals, but in the end will see spot values end in about the same position they were in when markets opened on Monday. This week played host to a small amount of economic data, but what data was released was indicative of an improving US economy. As you could have probably guessed, an improving US economy is almost always going to work against precious metals.
As we head into the weekend, investors will once again be paying extremely close attention to any and all developments stemming from the crisis in Ukraine. Though not much has taken place over the last 5 days or so, tensions remain high as pro-Russian rebels still control a large portion of eastern and southern Ukraine. Last Sunday, a referendum vote was held in the Donetsk region that more or less decided that Donetsk would break away from the Kiev government. Ukrainian government officials and many Western leaders are refusing to recognize the vote as being legitimate. Nonetheless, the rebels are still very much in control of large portion of the country and are not going to give up anytime soon.
Upbeat US Economic Data Puts A Dent In Spot Values
At the beginning of this week it was not expected that the little economic data scheduled to be released would have any major impact on spot values. However, that changed quickly as the few reports that were made public ended up catching the full attention of the marketplace. Just yesterday, weekly jobless claims came in at their lowest point in more than a year. This, along with a rally in the prices of Treasury bonds and notes is causing uncertainty to make its way to the marketplace. Many investors are now beginning to believe that the US economy is very much on the road to recovery and will continue to recover over the course of the next few months. For this reason, it is also expected that the Fed will continue to taper Quantitative Easing until it is completely done away with.
Right now, the belief that the US economy is gaining momentum is pushing equity markets higher while simultaneously putting pressure on precious metal spot values. If investor uncertainty continues, however, there is a strong possibility that it will translate into an increase in safe-haven demand. Though the direction of precious metals’ spot values is very much still an uncertainty, it is relieving to know that, despite current pressures, they are not falling too far away from key resistance levels. As it stands, gold is hovering just below $1,300/ounce while spot silver is below, but still in reaching distance, of $20/ounce.