Precious metals are feeling some support from a weaker employment report which was made public today, but will finish the week recording losses. The last 4 and a half days have been jam-packed with US economic data and have also played host to a flurry of investor activity. For us being in the middle of the summer, the last few days have been uncharacteristically busy. In addition to all the economic data being made public, investors were also continuing to concern themselves with the wide array of violence happening around the world. We have been paying attention to fighting in Ukraine and Gaza for a few weeks now, and for good reason too, because those two situations only seem to be getting worse with each passing day.
Precious metals have ended a disappointing month of July, but many are expecting that their woes will continue into August.
Early Week Economic Data Boosts USD
Beginning on Wednesday, investors from around the world were seen focusing their attention upon the release of some US economic data. The Federal Open Market Committee was scheduled to wrap up its monthly policy meeting on Wednesday, and as is always the case, investors anxiously awaiting what Janet Yellen had to say in her post-meeting statement.
Much to the dismay of the investing world, however, Ms. Yellen made it clear that the FOMC’s meeting this week centered upon the upcoming conclusion of the Quantitative Easing monetary policy. While the Fed did decide to reduce the monthly bond-buying initiative by another $10 billion, the market was more or less expecting such a move to be made. What investors really wanted to hear was information with regard to the future of US interest rates. As it stands, there is a large portion of the investing world that believes US interest rates will soon be risen in response to the improving economy. Unfortunately, however, the only information provided about interest rates was that the Fed plans on maintaining current rates for the foreseeable future. These are the same sentiments which have been echoed for the past few weeks now.
Also catching the attention of investors on Wednesday was the release of the US GDP report for 2014’s second quarter. Officially, it was reported that the US economy, on an annualized basis, grew by more than 4% in this year’s second quarter. These figures bested the expectations of market analysts and, in turn, provided the US Dollar with a considerable boost.
After Wednesday, the attention of investors shifted to today’s release of the latest employment figures from the US in July. After June saw nearly 300,000 new jobs added to the economy, initial expectations were that at least 230,000 new jobs would have been added in July. Instead, the report showed that only a disappointing 209,000 new jobs were added to the economy. This news worked to not only devalue the US Dollar, but to add some support to precious metals. For the first time this week, US economic data came to the aid of precious metals spot values. With that said, however, the gains made today hardly make up for losses incurred over the last week or so.
As we begin a new month, it will be interesting to see if precious metals will bounce back from their last few weeks’ worth of losses, or if things will begin to turn around. Currently, it seems as though the outlook on the US economy is improving as risk-appetite exhibited by investors also continues to gain momentum. While this is the case, it will only continue so long as economic data released over the coming days and weeks remains as positive as what we have seen this week.