Gold and silver finished the day on Friday having moved nicely upward in response to the Fed’s meeting this week. Spot values bounced between small gains and small losses through the first few days of the week, but upon the conclusion of the Fed’s meeting and the outcome of said meeting, spot values moved immediately upward.
In addition to focusing on what the Fed had to say this week, investors were also dealt their fair share of economic data from the US. Eyes are still on China too, because that country’s economy seems to be at a bit of a crossroads.
Fed Leaves Rates Unchanged, But Offers Hints
When this week got underway, the only thing on the mind of global investors was what the Fed was going to say in their post-meeting statement that was expected to be delivered on Thursday. For much of the past year, the prospect of raised interest rates is something that has weighed on the minds of investors everywhere. The US has kept their main interest rate at near-0 levels for almost a decade, and with improving economic conditions in the US it should come as no surprise that so many people were expecting to see rates hiked upward.
When their meeting finally wrapped up on Thursday afternoon, the Fed announced that they would be keeping interest rates at their current levels for the foreseeable future. This news was not so unexpected considering the volatility we have witnessed from China recently, but there were still some people who thought rate hikes might happen this week. Despite there being no change to rates this week, members of the Fed maintained that the US economy is still growing at a nice rate. The Fed continued to say that while rates are not going to be raised this month, we can still expect rate hikes to happen before the end of the year.
Despite this announcement, gold and silver spot values rallied to end the week. Now, silver is finishing the week up above $15/ounce while gold is edging in on $1,150/ounce.
US Economic Data Continues to Impress
This week brought about some good economic data from the United States in the form of a weekly jobless claims report. According to the Labor Department, claims for unemployment benefits last week fell by more than 11,000 to bring the seasonally adjusted average down beneath 264,000. The 4-week moving average of weekly jobless claims, which is seen as a more accurate gauge of how the employment sector is doing, finished down by nearly 5,000. All in all, recent employment data has been upbeat and is showing just how well the US economy is doing.
In addition, there were reports claiming that US house builders are building an increasing number of homes. Finally, a last report indicated that US households have significantly more money to spend this year than they did last year. The expendable income, according to experts, is a direct product of cheaper energy prices that have developed over the last year. With crude oil continuously falling due to a supply glut, energy prices very well might fall even further.
As we look ahead to next week, you can bet that the interest rate talk will continue. Now that investors can be confident that rate hikes will happen before the turn of 2016, the guessing game now begins as to which one of the next three months will see rates hiked. Should the Chinese economy stabilize and bring itself out of a rut, we may see rates hiked sooner than later. If the volatility continues, however, there is no saying how long we will wait until rates are boosted. After all, just because the Fed expects rates to be risen before the end of the year does not mean that they actually will be.