Though gold and silver finished the week succumbing to some profit-taking, the fact the matter is that this is one of the biggest weekly gains we have seen metals make in quite some time. It may seem like something major happened to propel metals forward, but the reality is that metals’ success this week is thanks to many of the same factors that have been taking up headlines recently. Things like the oil supply-glut, instability across equity markets, and a downward turning US Dollar were all talking points this week.
This 5-day trading session likely seemed a bit quieter than normal, and the reason for that is due to the fact that Chinese markets were closed due to the extended celebration of the Lunar New Year. China heavily influences the global market and is the source of many major talking points, so their absence this week was undoubtedly felt.
Gold, Silver Moving Dramatically Upward
On Friday we are seeing some mild profit-taking, but on Thursday both gold and silver were seen making massive gains at just about every turn. In fact, gold gained more than 3% on Thursday alone as it climbed by more than $50/ounce.
An address by Fed Chair Janet Yellen to Congress earlier in the week is when we really started seeing precious metals move forward. In her address Yellen made it clear that there is no guarantee that the Fed will continue raising interest rates throughout the duration of this year. Most people had already come to terms with the fact that no policy moves would be made at the upcoming March meeting, but now it seems as though interest rates may be kept at current levels even longer than that. This moved the Dollar downward and stoked the safe-haven demand fire, driving gold and silver spot values higher.
As we look ahead to next week and what it may mean for gold and silver, it will be truly interesting to see if spot values have enough momentum to climb even higher than they already are. We are seeing profit-taking to close out the week and there is a small contingent who thinks that profit-taking will intensify on Monday when Chinese investors are back in the game full swing. Still, global economic conditions are so tumultuous at present that it seems like safe-haven demand will remain strong.
Weekly Jobless Claims Fall
For the first time in a few weeks the US Labor Department delivered good news with regard to weekly jobless claims. It was announced on Thursday that last week’s first-time claims for unemployment fell by more than 15,000 from the week before. Not only was this great news, it was made even better by the fact that the seasonally-adjusted average of claims fell by more than 3,000. This gauge is seen as a much more accurate picture of the current US employment sector, so this news was welcomed with open arms.
Fortunately, even the upbeat employment report was not enough to throw metals off track. On Thursday, the day that the employment data was dealt, gold gained more than $50 while silver picked up more than half a Dollar.
With Chinese markets back in focus next week I imagine things will be a bit more eventful than they were this week, but it is difficult for most people to envision gold and silver doing anything other than continue to capitalize off their current momentum. Next week’s weekly jobless claims report will also be called into question because it will be interesting to see how the US employment sector does with the global economy continuing to deteriorate as it has recently.