Gold and silver surged forward on Friday to close out positively a week that was, otherwise, a massive disappointment. Even in the wake of today’s gains, the market is currently stacked against precious metals and I do not see today’s gains being sustained for any extended period of time. Through the first four days of this week, gold and silver were looking at fairly large losses.
The theme of this week was the sheer quantity of economic reports published from the United States. Monday through Thursday offered a mixed bag of data, while Friday came forth and let down the entire marketplace with a report on employment that was far more disappointing than anyone could have expected.
US Jobs Data Misses the Mark
In the lead-up to Friday, the focus of the market remained on economic data from the United States. Today, the Labor Department released its report on employment growth for the US during September and what it showed was that the US is not immune from the economic slowdown that seems to be affecting the rest of the world.
Despite expectations of job growth of more than 200,000, the actual figures showed that fewer than 150,000 jobs were actually created last month. In addition to that, the outlook on employment in the United States took an even bigger hit thanks to the last two months employment reports being revised downward by nearly 60,000. The report kept getting worse as it was reported that wages took a step backwards during the month of September. All in all, we are seeing that perhaps the US economy is not necessarily immune from the effects of a global economic slowdown.
As for interest rates, today’s data delivered a blow to the expectations that rates will be risen before the end of the year. Though the latest commentary from the Fed holds that rates will be risen this year, I am beginning to have my doubts.
US Manufacturing Sector Takes Steps Backwards
Another important report this week came out on Thursday in the form of the ISM’s report on manufacturing in the United States. Basically, the report held that September saw manufacturing in the US take a significant step backwards. Market experts across the globe feel that the strengthening Dollar is making it not feasible for foreign investors to purchase US-manufactured goods.
Once again, this report also indicates that the US economy may be feeling the strain of the global economic slowdown. As we move further into the month of October, you can expect that the focus on potential interest rate hikes will continue. Next week will see even more economic reports from the US published, but I highly doubt that any of them will overshadow today’s employment report from September.
For gold and silver, the conclusion of this week was bit better than the beginning, but the week was still mostly a wash. At the end of the day, when it comes to gold and silver, spot values will have a difficult time moving upward so long as investors both here and abroad expect that interest rates will be risen before the end of the year. At this point, it seems as though it is going to take something special for investors to become convinced that interest rates will not be risen this year. With the next FOMC meeting only a few weeks away, you can bet that the speculation will continue along the same path that it has been for quite some time.