Precious metals have had an interesting week, though most movement has been in the downward direction. At the present moment in time, market conditions are such that investors simply aren’t very interested in safe-haven gold and silver. There is still a lot of turmoil across the global equities market, and that much is making things tricky not only for precious metals investors, but all investors across the world.
Unemployment Rate Drops After Sub-Par Jobs Data
There was a good bit going on across the global marketplace this week, but few things were more heavily weighted by investors than the non-farms payrolls data from August. This report, which was released earlier in the day on Friday, showed some less than impressive growth figures from last month. Despite expectations for job growth of more than 200,000, the actual figures showed that fewer than 175,000 new jobs were created last month. This figure is disappointing and will likely make speculation regarding potential interest rate hikes a bit more confusing than it would have been should the data have come back positively.
Despite the figures coming back in poor fashion, the overall unemployment rate inched closer to an even 5% as it was reported that it declined to 5.1% overall. Being that economists were expecting to see around 220,000 new jobs created during the month of August, it is easy to see why this report is being deemed as disappointing. With the Chinese economy continuing to struggle, and no one really sure what their central bank is going to do to monetary policy, I would not be at all surprised to see the Fed hold off on interest rate hikes for at least another month. The FOMC is scheduled to have their September meeting in less than two weeks’ time, so investors are hoping to have the final word by then.
Worries Over China Persist
The global marketplace is and has been for quite some time concerned over the lack of growth coming from China. Just this week we received some more sub-par economic data, indicating that the country’s manufacturing sector may be on the verge of contracting. The world’s largest economy has been struggling for quite some time, and now it is beginning to weigh on other economies around the world.
Just this week, China’s Shanghai Index declined by more than 1% which ended up having a negative impact on markets in the United States and elsewhere around the world. For gold and silver, the fact that China’s stock market and economy are struggling means that gold and silver will have a difficult time moving forward. In addition, crude oil is seeing its value decline and as a leading economy this is doing the spot values of gold and silver no favors. With the latest Iranian nuclear deal having been passed by Congress, there is a strong likelihood that Iranian crude oil will allowed to be distributed across Western markets. Iran’s oil has been kept out of Western markets for years now, and with that about to change it is highly likely that the price of crude oil will depreciate even more. While good for consumers at the pump, crude oil as a leading commodity decreasing in value is not good at all for precious metals.
As we look ahead to next week, it is highly likely that we are going to be on the receiving end of some more economic data from the month of August. As far as US data is concerned, the market is going to hawk over it and look to take anything away from it that might have an impact on the movement, or lack thereof, of interest rates. Clearly, the global marketplace is very much concerned with the upcoming FOMC meeting, and I do not foresee that changing anytime soon.