Precious metals lost more value on Friday to close out a fairly poor week of trading. All in all, there were not very many upbeat pieces of news nor economic data for metals to feed off of. Instead, this week saw investors grow in confidence that interest rates are, in fact, going to take place this summer. Of course, everyone is awaiting the June FOMC meeting to find out more concrete information regarding rate hikes, though early signs are pointing in the direction of them taking place this summer.
Looking ahead to next week, I envision the market being on the receiving end of quite a bit of economic data from the month of May. Though we were dealt the all-important labor statistics today, plenty of other vital data points lie ahead and will be waiting for us next week. As has been the case for the past half year now, I imagine that interest rate hike talks will continue to persist through the foreseeable future.
Jobs Data Beats Expectations
Playing heavily into how investors think interest rate hikes will go is the nature of employment data in the US. Through the first few months of the year employment data has been anything other than upbeat, though that is beginning to change. As for May’s non-farm payrolls report, it was widely expected that we would see job growth at or above 225,000 new jobs. Unfortunately, those early-week estimates may have been downgraded a bit on Wednesday when the ADP job growth report showed that only a little more than 200,000 private sector jobs were added to the economy last month.
To the surprise of mostly everyone, however, today’s non-farms report came back much better than expected as it showed that more than 280,000 new jobs were created last month. Not only that, but April’s particularly weak employment report was revised upward. And, on top of it all, a separate Labor Department report showed that wage growth is on the up and up. For the longest time, one of the many factors standing in the way of rate hikes was the fact that employers were added new jobs but still not paying existing employees any more.
Now, the attention of the marketplace turns to June 16th’s installment of the FOMC meeting. Hopefully the FOMC gives us some solid insight regarding rate hikes because it has been quite some time since we have been given anything closely resembling that.
Greece Misses IMF Debt Repayment
Another focus for investors this week was the fact that Greece had to make a scheduled loan repayment of about $325 million to the IMF today. Early this morning, however, the expectations of many were met when it was reported that Greece was not going to make the payment but instead opted for bundling June’s payments together and making one larger payment later in the month.
For many, this move is a clear sign that the cash-strapped Greek are simply stalling and delaying an inevitable exit from the European Union. This situation is coming to the aid of gold and silver, but this week that aid came in the form of lessening losses. Though metals have lost value at every turn this week, things could have been a lot worse if it weren’t for the Greeks and their massive financial issues causing safe-haven demand to not completely fade into the background. Going forward, it is my expectation that gold and silver will not receive very much more benefit from the situation surrounding Greece seeing as most people have now come to terms with the fact that Greece may not be a member of the EU for all that much longer.