Gold and silver, after making some solid strides forward on Thursday, were beaten back down on Friday thanks to US jobs data that beat expectations. On the whole, this week was not very full of economic data, but what it lacked in data it made up for in discussions and speculation regarding when interest rates might finally be boosted. Because most people were still celebrating the Easter holiday on Monday, this week also got off to a slow start.
For right now, precious metals are in a state of limbo, without much impetus to move forward, but with enough buying interest that spot values are not likely to move all that far downward either. As we move into April and people look forward to what the Fed might have to say about interest rates, I am intrigued as to what might take place.
Fed Comments on Interest Rate Hikes
In a testimony to members of the US government this week, Fed Chair Janet Yellen did her part in praising the resilience of the US economy, but at the same time made it clear that she was in no rush to see interest rates raised. As has always been the case with her, she needs to see clear-cut evidence that factors enable such an increase. Her remarks were taken as more dovish than anything else and worked do drive the US Dollar downward.
Barely a day later, also in a speech, Charles Evans, who heads the Federal Reserve in Chicago, claimed that now is the perfect time for rates to be raised. Not only does he expect that economic growth through the last three quarters of this year will be robust, he expects inflation to hit or exceed the Fed’s 2% target. Though this caused a stir in the marketplace, it must be mentioned that Mr. Evans is not a voting member of the FOMC and has no direct say in what happens to rates going forward. Still, his remarks had a lot of people getting quite excited.
Jobs Data Galore
As is typical with the end of the month, there was plenty of US jobs data for investors to mull over this week. First up was the ADP private-sector job growth report that was due out on Wednesday. This report showed that the private-sector of the US economy grew by 200,000 jobs last year, a number that just fell short of expectations. While this report initially had people worried, it is important to remember that the ADP report almost never directly influences the report dealt by the US Labor Department.
Then, on Thursday, the marketplace was dealt the weekly jobless claims report, and it showed that more than 10,000 new people applied for unemployment benefits last week. This not only brought the seasonally-adjusted average number of claims back up above the 270,000 mark, it put a damper on how so many people feel about the strength of the US employment sector.
Finally, on Friday, it was announced by the Department of Labor that about 215,000 new non-farm payrolls were added to the economy last month. This not only boosted hopes that interest rates would be risen sooner rather than later, it also beat expectations by a far amount. Now we will have to wait and see what the Fed has to say at their upcoming meeting. Right now, it does not look like interest rates are going to be raised anytime soon, but the Fed acts in mysterious ways so I truly would not be surprised to see the trigger pulled sometime in April or May.
This much, however, remains up in the air and a point of contention for investors everywhere.