For most of this week, both gold and silver ended up losing value. Trading session after trading session, both gold and silver continued to sink as many factors began stacking up the prospects of metals quite quickly. There was a good bit of news from the US which came in the form of commentary, growth expectations, and economic data. By week’s end, however, metals received a nice boost to recover most of what had been lost. We are now seeing both gold and silver ahold of some fresh momentum that will, in all likelihood, be carried into next week.
Other than the new emanating from the US, investors the world over were concerned with what the UK would decide with regard to their referendum vote. For those who might be unaware, the UK was left to decide this week whether it would remain part of the EU or if it would become an independent nation and forge its own future. This was a hotly contested topic, and one that has been in the spotlight for the better part of the last few months.
US Economic Data Dealt
The first item this week that brought attention to the US economy came in the form of the existing home sales report from the month of May. For the third straight month, sales of existing homes did better than they did the month before. According to the organization that published the data, the National Association of Realtors, the reason existing home sales have been so upbeat is largely due to the fact that interest rates have remained lower for longer than expected. Looking to take advantage of rates that may not remain low for an extended period of time, people are buying homes while the getting is good.
In addition to the upbeat existing home sales data, we were on the receiving end of a weekly jobless claims report that indicated 18,000 fewer first-time claims for unemployment were filed last week than the week before. This news alone was good, but it was just as encouraging for investors to see that the seasonally-adjusted number of first-time claims fell below 260,000. This is a huge psychological boost for people who want to see interest rates raised sooner rather than later.
Finally, Janet Yellen spoke to Congress this week and made it clear that the Fed must proceed with caution when it comes to raising rates. Beyond that, Yellen offered almost no indication as to when rates might be raised. At this point, the earliest time anyone is expecting to see rate hikes is in August, and even that is not the most likely of outcomes.
BRExit Vote in Focus
The biggest news of the week came in the form of a referendum vote in the UK which was aimed at determining whether the UK would remain in the European Union or not. For the longest time, it was widely believed that the UK would leave, but in recent weeks momentum formed around the “remain” camp. For gold and silver, this was bad news because an “exit” vote would have created enough economic uncertainty to give gold and silver a boost.
When the dust settled, it was determined that the United Kingdom would not remain a part of the European Union. This was amazing news for gold and silver and saw spot values immediately improve to close out the week. In fact, by the early morning hours, gold alone was up by more than $50 and did well to recover much of what was lost over the first 4 days of the week and end of last week. As we head into the last trading week of June, it will be interesting to see if spot values will continue to climb as a result of the UK’s decision, or if something will force spot values back downward.