Despite a host of factors working against gold and silver over the last few days, both metals are trading sharply higher as of midday on Friday. This week brought with it an absurd amount of economic data, most of which was from the United States and was better than market expectations. There were a few pieces of world economic data due out this week, but this had much less of an impact on the precious metals market.
The situation in Ukraine was mostly out of the news this week but is still feeling tensions rise as the days pass. Though violence did not necessarily get any worse this week, things throughout Ukraine’s eastern half have not gotten any better. Currently, many fear that the crisis in Ukraine will deteriorate further before we see it get any better. The US and Russia, the two entities that are supposed to be solving this mess, are doing nothing apart from butting heads and spinning their respective wheels.
This Week’s Economic Data Encourages US Investors Somewhat
Investors were excited for this particular 5-day trading session for the sole fact that it was set to yield more economic data than the previous three weeks combined. Kicking off the data this week was the United States’ first quarter GDP report. Though there were expectations of a rise in annual GDP of more than 1%, the data showed that annual first quarter GDP only improved by about .1%. Normally this type of news would give gold and silver a boost, but such was not the case as a majority of the investing world held their positions until the conclusion of the FOMC meeting, which happened on Wednesday afternoon.
When the FOMC had wrapped up their meeting it was made public that they had decided to reduce Quantitative Easing by another $10 billion. What’s more, the Fed went on to reiterate that they are collectively fully confident in the strength and trajectory of the US economy. This confidence comes only days after reports were published saying that the Chinese economy will overtake the US’ by the end of the this year.
Finally, the week was brought to an end from an economic data standpoint this morning as the latest US Labor Department employment figures were made public. Despite market expectations of a rise in non-farm payrolls of 200,000-215,000, the actual figures showed that non-farm payrolls grew by more than 280,000. The US Dollar took a big hit after the data was made public and that, along with safe-haven demand, is really helping precious metals close out the week on a positive note. As it stands, gold is just barely back above the $1,300 threshold while silver is still trying to work its way back to $20/ounce.