Gold and silver had a relatively rough week, with a 5 day spread of ups and downs. The two major news stories of the week revolved around the US economy in the form of a FOMC meeting as well as the latest US jobs report. Some additionaly economic news was released earlier during the week, and while it made its impact on the precious metals market, that impact was relatively small and inconsequential.
The middle of the week showed us some positive news for precious metals in that the month of July was the first time in a while gold and silver both netted gains over the course of a month.
Federal Reserve Meets Again
It wouldn’t be a weekly precious metals market recap if we didn’t mention the Federal Reserve, and this week kept with tradition as investors and market watchers geared up for the Fed’s Open Market Committee and their latest meeting which was held on the last day of the week.
Even though the meeting was scheduled for Friday, its prepared text was released on Wednesday for investors to mull over and react too. Despite many wanting to hear shocking news, the FOMC more or less simply reiterated what Ben Bernanke had to say only a few weeks ago. They stated that monetary policy will remain as it is for the time being, and barring any crazy changes in the economic atmosphere in the United States, the Fed sees no real reason to put an end to its Quantitative Easing program. Quantitative Easing is simply a fancy name for the government’s monthly bond-buying initiative that spends over $80 billion per month on bonds in an effort to devalue the US Dollar and thus improve the demand for US exports. So far QE has worked almost exactly to plan, though the Fed has insisted that it is too soon to tell if QE no longer needs to exist in the US.
Unemployment Rate Falls Further
The other marquis story of the week came in the form of the latest US jobs report which was expected to be positive yet again. The projected data from this US jobs report was anticipated to see non-farm payrolls improve by about 175,000, a number that would lower the unemployment rate by a tenth of a percent.
When the data came out, it ended up helping out precious metals slightly because it came back weaker than expected. Non-farm payrolls factually improved by 162,000 and, while this was a good gain, it was weaker than what was expected. Still, the US unemployment rate was able to decline from 7.6% to 7.5%, and though this number may not seem like a significant tally, it means that the US economy is continuing along its path of overall improvement.