Gold and silver spot values edged lower today after a stronger than expected employment report was made public. In general, this week has been full of economic data, most of which has weighed on the spot values of gold and silver. Yesterday saw metals receive a bit of respite from recent pressure, but the week as a whole has seen metals decline in value significantly. In addition to today’s employment report, investors also witnessed a key European Central Bank policy meeting, which took place yesterday.
For the most part, the crisis in Ukraine has faded into the background of the marketplace’s attention. There has been a general lack of violence and, as we all know, violence is what fuels safe-haven demand for gold and silver With talks of a ceasefire in the works, it is more than likely that the crisis in Ukraine will be ignored for the foreseeable future.
ECB Meeting and Non-Farms Data Impacts Precious Metals Market
Despite there being a boatload of economic data on the slate this week, nothing was more highly anticipated than Thursday’s European Central Bank policy meeting. This meeting is always watched over with heavy scrutiny by the market, but this time was different due to the overriding expectation that the ECB would be announcing the implementation of new monetary stimulus. Before markets even opened in the US yesterday, it was already announced that the ECB was, in fact, going to pursue new stimulus measures.
When the meeting came to an end, it was announced that the ECB was going to reduce the EU refinancing rate by 10 basis points while simultaneously introducing a -.1% deposit rate. The news first pushed the euro currency down to a more than 4-month low, but those losses were somewhat reversed by day’s end. In his post meeting address to media, ECB president Mario Draghi made dovish comments that were welcomed with open arms by investors. His comments ended up giving precious metals a significant boost that lasted throughout the day.
Today, the non-farm payrolls for the United States in May came back better than expectations and ended up putting a small amount of pressure on gold and silver. Officially, more than 215,000 jobs were added to the US economy in May, good enough to drop the unemployment rate to 6.3%. This news worked against precious metals and made sure that they were going to end the week posting fairly heavy losses.