Gold and silver are suffering significant losses for yet another day this week as what was once looking like a week of marginal losses is now turning into one of very, very significant spot value declines. During the first half of the week, things were mostly quiet and spot values traded mostly sideways due to the fact that so many people were simply awaiting what the Federal Reserve had to say in the wake of their most recent policy meeting. Of course, the post-meeting statement delivered by the Fed was deemed to be much more hawkish than expected and did not at all work in metals’ favor.
Things only seemed to have gotten worse on Thursday once a small batch of quite important US economic data was made public. Though there wasn’t all that much data on the table, the reports were very important and enough to drastically change the attitudes and outlooks of many global investors. Now, as we look ahead to next week, it will be interesting to see if spot values can bounce back to any extent or if we will see them continue to be on the decline.
FOMC Statement Far More Hawkish Than Expected
This week’s FOMC meeting draw the usual attention from investors from around the world. Through Monday, Tuesday, and the first half of the day on Wednesday, the spot values of precious metals and most other assets moved sideways as investors opted to hold their positions until the Fed delivered its post-meeting statement sometime Wednesday afternoon.
Though the Fed’s removal of quantitative easing did little to surprise the marketplace, the fact that they took on such an upbeat outlook on the US economy did. Still, with that being said, the FOMC did reiterate that it would still be “considerable time” until interest rates are raised. Regardless, the Fed’s more positive outlook on the US economy was beneficial for the US Dollar and stocks, but was almost wholly negative for the precious metals market.
US Economic Data Does Metals No Favors Either
As if Wednesday’s hawkish FOMC statement wasn’t enough, Thursday brought with it a few economic reports that only added to the pressure being felt by gold and silver. Shortly after markets in the US opened yesterday, it was reported that the third-quarter GDP of the United States grew by much more than expected. The economy’s unexpected rate of growth was in stark contrast to expectations and ended up being the icing on the cake that was the best 6-month period of growth experienced by the US economy in more than ten years.
What’s more, it was also reported that US unemployment filings were the lowest during October than they were at any other single point in the last 14 years. As you could have probably guessed, all of this data has ended up working against precious metals in the form of increased investor risk-appetite. So long as more interest is being given to stocks and the US Dollar, not even the strongest physical demand for precious metals will be able to pull spot values back up to where they were at less than 3 days ago.