February 4th Weekly Silver Market Update

Precious metals posted solid gains all throughout the week, and ended the 5-day trading session in much the same fashion. As far as geopolitical occurrences are concerned, the radar was quiet. When it came to economic data, however, there was a boatload for investors to talk about, especially from the United States. Employment data abounded throughout the past 5 days, and much of it was a mixed bag.

US Offers Up Plenty of Employment Data

The employment data stream started on Wednesday with the ADP private-sector job growth report. ADP, a globally recognized payroll processor, announced that more than 200,000 new jobs were created in January. In addition to this, December’s private-sector job growth report was upwardly revised to over 265,000. Now this data is all fine and good, but the fact of the matter is that very few investors put too much weight into the ADP report. With that being said, there is a sense of optimism surrounding the pending employment report due out on Friday from the Labor Department.

On Thursday, investors were dealt what ended up being more of a downbeat weekly jobless claims report from the Labor Department. According to the data, last week saw 8,000 more first-time claims for unemployment filed than the week before. Though this is not necessarily the worst news in the world, the 4-week moving average of jobless claims was reported as having moved upward by about 2,000. This is the bigger piece of news because the 4-week average is often viewed as the most current and up to date view of the employment situation in the United States at a given moment in time.

Finally, on Friday, it was January’s employment report that was due out. This report did not stray too far from expectations, and ended up not really hurting gold and silver’s progress.

Other Downbeat US Economic Data Dealt

The Institute for Supply Management released their reading on non-manufacturing activity in the United States during January. For an economy that is largely service-based, Wednesday’s report was not very upbeat at all. Officially, January’s reading came in at 53.8%, down from more than 56% during December.

ISM claimed that turbulent global economic conditions at present played heavily into the reports’ downturn. With these same factors continuing into February, it is difficult to envision these figures ticking too far upward next time around.

Finally, there was some commentary this week from members of the Federal Reserve, specifically from New York Federal Reserve president William Dudley. Dudley commented that the Fed may have to reconsider their interest rate hiking plan as the Dollar improves despite a weak global economy. As the Dollar continues to gain strength, and other economies remain weak, investment dollars are going to begin shading away from the US in search of cheaper deals elsewhere. This will be an interesting situation to see play out, and is likely one that will work in the favor of gold and silver.

As we look ahead to next week, the focus will be on whether the momentum currently being exhibited by gold and silver will be able to be sustained. So long as economic turmoil across the world persists, gold and silver seem as though they stand to benefit. Investors the world over are becoming increasingly unsure about what to do with their money, and this is breeding an increasing number of investors who are seeking safe-haven with precious metals. How far gold and silver can move upward, however, remains to be seen.