Gold and silver finished a poor week on a sour note as boatloads of economic data ended up taking its toll on spot values. All in all, the attitude of investors did not undergo much of a change this week. To be honest, the past 5 days have played host to very little in the way of economic activity and has brought about no real geopolitical news stories. Now that Greece, China, and the Iranian nuclear deal are all on the back-burner, it is tough to say where gold and silver are going to derive any sort of upward momentum.
Looking ahead to next week, I would be remiss if I didn’t say that it was shaping up to be just as slow as this week turned out to be.
Hawkish Comments From Dennis Lockhart
One of the week’s top news stories unfolded on Tuesday when it was reported that Atlanta Federal Reserve president Dennis Lockhart made comments alluding to his support of a September interest rate increase. In his prepared speech, Lockhart made it clear that he is fully behind a rate hike, though he did not specify when he would like that hike to occur.
Being a voting member of the Fed, Lockhart’s comments on interest rates is heavily weighted by investors. Immediately after his comments, the greenback ticked upward while metals continued along their now quite extensive declines. With interest rate hikes expected to take place at the September FOMC meeting, investors the world over are beginning to make moves that factor in soon-to-be risen rates. Because of this, there is somewhat of a likelihood that gold and silver may soon be relieved of some of the pressure being created by rate hike speculation.
Wealth of Jobs Data
As was mentioned previously, this week offered a good bit of economic data from the US. All in all, the data was a mixed bag of upbeat and less than impressive reports, but the overall slate of data was determined to be upbeat in nature. Earlier in the week, ADP released its reading on private-sector job creation during the month of July. Though most people were anticipating a rise in private-sector jobs of more than 220,000, the actual figures showed that fewer than 190,000 jobs were actually created. This news did little to support the Dollar and actively unnerved some investors who began thinking that Friday’s Labor Department non-farm payrolls report would come back short of expectations.
Fortunately, these investors were proven to be wrong by mid-morning on Friday when it was reported that roughly 215,000 non-farm payrolls were created during the month of July. These figures did not necessarily impress investors, but the fact that the data fell in line with expectations was good enough for most to stick to the belief that rate hikes will be coming in September. Despite adding more than 200,000 jobs during July, the overall unemployment rate remained stuck at 5.3%.
Looking ahead to next week, it is highly likely that things will be slow and typical of a mid-summer week. For gold and silver, this is not good news at all as slow days in recent history have often meant that spot values will be taking a hit at the hand of technical selling. Thanks to the expected data void, you can expect that most of the talk around the global marketplace will be regarding interest rate hikes.
Many investors are wondering if and when gold and silver might receive an upward boost, but that much is tough to say for sure. Current market conditions are wholly stacked against precious metals, so it is going to take a big data release or geopolitical development for metals to be given any sort of upward momentum.