Gold and silver both rallied through the latter half of this week to end the 5-day trading session in somewhat impressive fashion. All in all, the past 5 days have been typical of recent history in that the market was almost wholly focused on what was going on with regard to economic data from the United States. With rate hikes reportedly being only about a month away, it should come as no surprise that US economic data is being seen as so important.
In other news from around the world, it was reported this week that Greece’s parliament finally voted to accept the terms of the most recent EU bailout package. The deal, which will see many billions of euros deposited into the Greek economy, was the subject of a lot of debate but finally was passed. Now that Greece is able to make scheduled loan repayments, it will be interesting to see how long they are able to remain out of the headlines.
FOMC Minutes Mostly Dovish
On Wednesday, the biggest data release came in the form of the minutes from July’s meeting of the Federal Reserve. Investors, a majority of which were hoping to hear more with regard to the future of interest rates, descended upon the minutes in order to find out as much information as they can. In light of China’s recent move to devalue the Yuan, there are a large portion of investors who became doubtful of the supposed September date for the hiking of interest rates.
The minutes, which were dealt during the early afternoon, came back more dovish than anything else. Members of the Fed alluded to their support of a September rate hike by saying that the prerequisites for such a hike were almost there. Of course, as is typical of the Fed, they remained cryptic in their language and avoided giving away too many worthwhile details.
The minutes were not without their show of Fed doubts though, as members expressed fears regarding China’s policies. Moves like those made last week threaten the US economy on multiple levels, and if China is going to continue actively altering monetary policy, some people think it is best that we hold off on hiking rates. In addition to that, other members expressed concerns regarding the diverging nature of US and world monetary policies. The fear tied to this is that these diverging policies will inevitably further drive up the value of the Dollar, which will in turn push commodities even lower. This is something that would have a negative affect on US exports.
Weekly Jobless Claims Rise to 277,000+
First time claims for unemployment benefits rose by another 4,000 last week to bring the seasonally adjusted total up above 275,000. Most experts were anticipating a small increase, but an increase nonetheless. Still, by week’s end the weekly jobless claims report did not have too great of an impact on the marketplace. After all, job growth in the US is at multi-year highs and wages are finally beginning to gain some traction and move forward.
As we look ahead to next week, I anticipate that the story will be little different than what played out during this 5-day trading session. The eyes of the market are going to be wholly fixated on any and all US economic data, but unless some groundbreaking news is reported, I am not expecting much in the way of an impact. For gold and silver, it will be interesting to see if this week’s rally will end up continuing through to the end of the month.