Gold and silver exceeded expectations this week for the first time in a long time. Despite many news stories that, at face value, looked to be negative for gold and silver, both metals survived and even came out with positive weekly gains. Though the gains realized by gold and silver this week are nothing to write home about, any gain is better than the near $100 losses we saw last week. Slowing down of the US and Japanese stock markets later in the week gave gold a quick chance to make some solid gains. Though this week saw gold and silver make small gains, these small gains were far better than anyone had anticipated.
Bernanke’s Address to Congress
Perhaps the biggest story of the week as far as precious metals news goes was the Federal Reserve chairman’s address to Congress about the current state of the economy as well as the future of monetary policy in the US. Most expected Bernanke to announce a solidified timetable for when Quantitative Easing, the Fed’s bond-buying program, would be ended, but that did not exactly happen.
Though Bernanke did say that the Fed’s bond-buying program may be altered or wound down as soon as a few weeks from now, he offered no specific details about the severity of the “winding down.” The news of QE’s possible alteration was negative for metals, but not nearly to the extent that was expected. In fact, only a day after this announcement gold posted some fairly solid gains. Needless to say most investors were pleasantly surprised.
Chinese Manufacturing Data and More
Another big news story on the week was the fact that Chinese manufacturing data was to be released on Thursday, something that caught the attention of every investor. The data that was released more or less lived up to expectations in that it was disappointing and added more evidence to the belief that China’s economy is slowing down drastically.
The manufacturing data was released showed that China’s manufacturing sector contracted in April which is never a good thing. Many are expecting an announcement by China’s central bank in the next few weeks that their monetary policy will be altered in order to ward off inflation.
In other world economic news, the German economy grew by one tenth of a percentage point in the first quarter of 2013 in comparison to the final quarter of 2012. This and a few other pieces of data hinted to the fact that Germany’s economy may not be in as bad shape as a lot of the rest of Europe, though only time will tell if this is actually true or not.
The Week Ahead
As we move forward into the final week of May, every investor will have their eyes on both US and Japanese stock markets as both kind of faltered towards the end of this week. In addition to stock markets putting out disappointing results, the USD fell a bit during the latter stages of this week. I do not anticipate that these results will stick for any extended period of time, though they were good enough to give gold and silver room to make decent gains.
Prepare for a slow start to next week as the United States will be taking Monday off in order to celebrate the Memorial Day holiday.
Weekly Shift
Gold started the week at $1,365 and by closing time on Friday it was sitting at $1,385. This was a gain of roughly twenty dollars. Silver started the week at $22.42 and ended the week at $22.41. This was a loss of about a single penny.