Investors the world over witnessed one of the best 5-day performances by precious metals in months. Currently, spot values are the highest they have been in months and the outlook on precious metals is rapidly shifting from bleak to upbeat. This week was a generally quiet one as far as economic data was concerned, making it even more impressive that gold was able to gain over $50 while silver picked up well over a dollar. That kind of positive performance during a week with little to nothing happening makes investors salivate at the thought of a week full of bullish news for precious metals.
Some things worth mentioning that took place this week include the newly appointed Fed chairperson’s inaugural address to Congress. Also, the market was greeted with its first upbeat economic report out of China in nearly a month; unfortunately, the same cannot be said about this week’s light US economic data.
US Equities Make Their Final Push
When markets opened on Wednesday, investors were intrigued to see that gold and silver were posting gains right alongside US equity markets. Typically, whenever US stocks perform well, precious metals tend to do the opposite. This time, however, both metals and stocks were surging forward, effectively confusing the marketplace.
While this price action caused some investors to doubt the notion that US stocks have run out of gas, other market analysts were convinced that Wednesday and Thursday’s positive US stock performances were nothing more than a last push forward before equities ticked lower. Just as fate would have it, the gains stocks made over the middle stages this week have almost all been given back as of the early morning hours of Friday. Not only did Friday’s stock sell-off help metals, but so too did a weaker US Dollar. In fact, this week has played host to a variety of factors putting downward pressure on the greenback. For one, a Bank of England announcement that GDP growth is expected to exceed original forecasts prompted the GBP to gain against the USD. While the USD is still in a somewhat decent position, its comfort level seems to be slowly diminishing.
As we look ahead to next week the marketplace will be watching gold and silver spot values in order to see if metals really do have the near-term technical momentum that so many have claimed they do. Undoubtedly, next week will emit more economic news stories than this one and thus translate into a trading atmosphere that is not nearly as calm as the last 5 days have been.