For precious metals, this ended up being a positive 5-day trading session despite factors that may have led you to believe otherwise. We were dealt a good bit of economic data, but as has been the case recently, most of it was upbeat in nature.
As far as reports from other parts of the world are concerned, there really weren’t all that many to speak of. Greece’s parliament finally approved the latest EU bailout deal and it seems as though they will be able to make a scheduled debt repayment that totals in the multiple billions of euros. Going forward, however, I do anticipate that some way or another Greece will make its way back into the headlines.
FOMC Still Upbeat on US Economy
The biggest happening of the week came in the form of the most recent FOMC meeting as well as the release of the minutes from July’s FOMC meeting. All in all, the minutes from July showed a Fed that is growing in confidence of the strength of the US economy. Citing a large batch of economic data over the course of the course of the summer, many members of the Fed seemed to have alluded that September is the time we will see rate hikes.
With that being said, however, the market is somewhat divided in their thinking regarding rate hikes. Thanks to China’s move last week to devalue their currency, the Yuan, many investors and economic experts feel as though the global economy is too fragile for the US to be able to raise rates. The Fed and recent economic data assuaged fears that a September rate hike is too soon, but that thought has not completely gone away just yet.
Moving forward, the eyes of the market will remain on US economic data because it is seen as the driving force behind whether or not interest rates will be risen.
Upbeat Economic Data Dealt
This week played host to a good bit of economic data, most of which was closely eyed by the market for obvious reasons. First, there was a report stating that July saw the highest number of new housing starts in more than 7 years. With more people employed and the economy hitting on all cylinders, people feel comfortable enough to commit to purchases as large as a home.
Only a day later, it was reported that consumer prices in July upticked by .1%. This rise was in line with expectations and shows that inflation is not an overly large concern for the US economy, at least at the present moment in time.
As for what all this data means, that much is tough to say. In general, the upbeat nature of recent economic data means that investors will be more likely to subscribe to the belief that rates will be risen in September, but does not guarantee such a subscription. For this reason, economic data will continued to be closely monitored by the market as investors feel there is no such thing as a sure-thing without the Fed out and out saying it.
Looking ahead to next week and what it holds, I am not expecting much in the way of big news. We will be dealt a good bit of economic data from around the world, but at this point it is not so easy to tell which reports will be hawked over and which ones will be seen as non-factors. For gold and silver, this week’s gains were encouraging, but the market is still working against the progress of both gold and silver.