Gold and silver finished Friday slightly down due to a stronger than expected US non-farms report for May. In general, this week was full of economic data from both the United States and Europe, highlighted yesterday by the European Central Bank’s monthly policy meeting. The meeting and its outcomes were to be expected, though the impact they had on gold and silver was not.
The crisis in Ukraine continues to stay out of most headlines as the situation is not nearly the attention-grabber it was three or four weeks ago. In fact, there were even talks this week about Ukrainian and Russian governments orchestrating a ceasefire. We will continue to keep a close eye on all matters in the large eastern European nation, but nothing short of a major military movement will cause the situation to make it back into the headlines.
ECB Meeting, Non-Farms Data Has Major Impact On Metals
Today and yesterday were far and away the two most important days of the week. Yesterday brought about the latest European Central Bank meeting, and what investors heard in the wake of that meeting helped give gold and silver a boost. After more than a year of seemingly constant deflationary pressure, the European Central Bank finally decided to announce its plans for monetary stimulus. These plans included reducing the refinancing rate by 10 basis points as well as introducing a -.1% deposit rate. In the immediate wake of the meeting, the euro currency was pushed to a more than 4 month low while the US Dollar was seen making impressive gains.
When Mario Draghi addressed media in the wake of yesterday’s meeting, his comments were perceived as more dovish than anything and ended up lifting gold and silver spot values. When the day was through, gold and silver had made their largest single-day gains in more than a week.
Today brought about the latest non-farm payrolls for the United States, and what the data had to say was not at all what the market was expecting. On Wednesday, the ADP employment report for the US in May came back far weaker than expected and gave precious metals a marginal boost. Today, however, the non-farms data showed that more than 215,000 jobs were added to the US economy in May and that the unemployment rate fell to 6.3%. This news worked against precious metals and sealed their fate for the day and the week. Hopefully, with some luck, next week will be a bit more favorable for gold and silver.