Precious metals have another week of losses to reflect upon as factors once again were stacked against both gold and silver. There was plenty of economic data on the table this week, but with most of it being upbeat in nature and in favor of interest rate hikes, metals were always going to be likely to incur losses. Apart from the overload of economic data we received this week, there wasn’t much for investors to mull over and discuss. In many respects, this week was typical of a mid-summer trading session.
Going forward, it seems as though the global marketplace is concerning itself with one thing and one thing only—the potential hiking of interest rates in the US. This has been a topic of discussion for some time now, but as the month of September approaches, the conversation is only going to intensify.
Fed Makes Hawkish Interest Rate Hike Comments
One of the week’s top news stories unfolded just as the 5-day trading session got underway. Earlier in the week, it was reported that Dennis Lockhart, president of the Atlanta Federal Reserve, commented with regard to his intent on raising interest rates in the near future. As a voting member of the Fed, Lockhart’s comments are heavily weighted by investors who know just how influential he can be. Continuing in his statement, Lockhart made it clear that it would take a sudden and complete turnaround on the part of the US economy in order for his opinion to be altered.
This was not the most surprising bit of news, but was a news story that only served to push metals further downward. This has been a recurring theme, though, as few factors are presently able to offer metals any sort of respite.
ADP Jobs Data Disappoints, Labor Department’s In Line with Expectations
Though the big piece of economic data this week was undoubtedly Friday’s non-farms payrolls report for the US for the month of July, investors had plenty of other employment data to chew on prior to the all-important data release. Earlier in the week, it was reported by ADP that the US economy produced less than 190,000 private-sector jobs during the month of July. Seeing as forecasts were expecting private-sector job creation numbers to be somewhere in the 220,000-230,000 range, it is clear to see that this data point fell far short of expectations. While the ADP report did not have all that much of an impact on the market, it did cause some investors to grow concerned over what Friday’s data would have to say.
Luckily, a major data miss was avoided as the Labor Department reported on Friday that roughly 215,000 non-farm jobs were created during July. This number was about in line with expectations and ended up not having all that much impact on global markets. For gold and silver, it forced spot values downward, though this was always going to happen so long as the data was not a major miss. Now, investors are even more convinced that interest rate hikes will, in fact, be taking place this upcoming September.
For gold and silver, both near and long-term outlooks are bleak. There have been little to no news stories capable of lifting spot values up, and even when one of these stories does break, the overall anti-metals sentiment of the global investing world works to diminish those gains only a day or two later. Now that the market is actively factoring in the raising of interest rates in the near future, it will be interesting to see where spot values head from here. For those thinking that gold and silver cannot possibly decline much further, I would not be so confident in that, because current market conditions are really stacked against metals.