Precious metals bounced around this week and ended up finishing not too far from where they started things. There were a good bit of economic reports released this week, but most of them favored other asset classes and mostly worked against metals. Crude oil has also been in the news this week as the price, per barrel, continues to decline. As has almost always been the case, the downward movement of crude oil is dictating the movement of other commodities, namely gold and silver. The bad thing is, it is looking like the value of crude oil will continue to decrease over the course of the next few months.
Upbeat European Economic Data
From Europe this week, we received something we haven’t in quite some time—good news. For one, France has reported that its economy is trucking right along and is due to emit some nice Q3 growth statistics. Citing an increase in industrial production, the once beleaguered European nation finally seems to be shaking off the grip of the recession that plagued most of Europe. As we move forward, it will be interesting to see if other economies, like those of Spain and Portugal, can emulate the performance France has put forth.
In addition, it was also reported that the German economy is doing particularly well at the present moment in time. With Germany being a leading Eu economy, any upbeat news from that nation is welcomed with open arms by investors.
Tying it all together was another report, this time an upward revision to the Eurozones Q2 GDP data. Despite Europe and most of the rest of the world having emitted poor results from April to June, we now find out that the poor performance may not have been so poor. All in all, it looks as though the European Union is beginning to emerge from economic stagnation and are creating growth in most market sectors. Should this continue to be the case as we head towards the close of the year, well, that much remains to be seen.
FOMC Speculation Continues to Rage
Speculation regarding whether or not the Fed will decide to raise interest rates at its meeting next week is continuing to happen in just about all corners of the global market. For now, due to the recent turbulence from China, a strong contingent of investors have grown convinced that September is not the month we will hear of rate hikes. Rather, it is being reported by some circles that we may have to wait until November at the earliest until we hear of rate hikes being put in place.
The Fed is scheduled to meet next Wednesday and wrap up said meeting the following day, so the middle of next week will be a real test. Personally, I think the Fed is going to go through with hiking rates. Their commentary over the course of the past few months has been upbeat with regard to the labor market and US economy overall, so I do not see why rates will be kept where they are. Of course, China is a major wildcard, and with all of the policy shifts they have enacted over the past month, some feel as though the global market is too unstable to support a US interest rate hike.
Next week will bring about a plethora of speculation regarding interest rate hikes, but I do not think it will extend much beyond speculation until the Fed finally meets and holds their post-meeting statement.