Gold and silver bounced around a bit during the week but managed to end up on top when all was said and done. Despite it being the end of August, a time of the year where the trading atmosphere is usually quiet, this week has featured a number of different news stories. The ongoing violence in Egypt continues to catch the attention of the world as protesters and police continue to clash. Violence of this type helps boost demand for gold and silver by making the two metals appeal to investors as safe-haven assets.

In addition to the violence in Egypt our attention was also placed upon the US Federal Reserve and a looming currency crisis set to strike Asia. All in all it was a pretty busy week as far major, worldwide news stories were concerned.

FOMC Minutes Released

The Federal Reserve, over the course of the past month or so, has been in the news quite often. This time around they made the news because investors were anxiously awaiting the release of the minutes for the FOMC’s September meeting. The reason investors got so excited, as is usually the case, was because they were hoping to hear some clarification regarding the future of Quantitative Easing in the United States.

When the minutes broke earlier this week, hopes were shattered as the FOMC released a text that indicated the Fed was more confused about monetary policy than it was sure of any particular move to make. Because no new news indicating that QE would be done away with was mentioned in the minutes, investors saw this as being favorable for gold and silver. Despite that, gold and silver did not make any major gains in the immediate aftermath of the Fed’s minutes.

Asian Currency Worries

Almost a full two weeks ago now, gold and silver began their drastic upswing that has since been continued. Around the same time, there was another ongoing news story that got more or less overlooked due to precious metals’ unprecedented gains. This was the story of the Indian Rupee and the Indonesian Rupiah, both of which were depreciating as fast as gold and silver were making gains. At first, few paid this story too much attention because they were under the impression that the decline was only a temporary one.

When this week began and the two currencies continued to lose value, some concern was raised. Market experts determined that rising interest rates in countries like the United States as well as those in Europe were translating into heavy downward, selling pressure being placed on mid-level currencies. The fear is that these high interest rates would then cause even more currencies to lose their value just as quickly as the Rupee and Rupiah have.

For this reason, we will continue to keep a close eye on currencies throughout Asia and the world to see what, if any movements they will be making.

When this first full week of August initially kicked off, it was quickly shaping up to be a fairly dismal week for precious metals. Thanks to some stronger economic reports from around the world, gold and silver came out of the gate this week posting some fairly heavy and consistent losses. Adding insult to injury, a member of the Federal Reserve made a statement that did not even come close to coinciding with what other Fed members have had to say over the course of the past few weeks.

Luckily, the last few days of the week were able to see gold and silver gain back the losses they made and then some. On the whole, this past 5 days was neutral for gold yet fairly positive for silver.

Positive Economic News

Over the course of the past year or so all we have heard as far as economic reports out of Europe are concerned is negative news story after negative news story. On top of the fact that there were very few positive news stories to latch on to, there were very few people attempting to rectify the collapsing European economy.

The first three days of this week brought with it three separate reports, all of which indicated that the European economy may have a positive outlook going forward. The firs report was the latest PMI reading, of which was the first reading over 50 in a while. As you may or may not be aware, a PMI reading above 50 suggests economic growth, while one under 50 points toward economic contraction.

The second and third positive economic reports came in the forms of an increased number of orders for manufactured goods from May to June as well as an increase in German industrial production. Despite these positive news stories, the European Central Bank forecasts that 2013 will end up being a year of slight contraction for Europe, though the prospects of a growing European economy in 2014 is looking more and more likely all the time.

These news stories, while good for the average European citizen, were adversarial to the price of gold and silver.

Weekly Move

Gold and silver fell dramatically over the first three days of the week, though the second half of the week saw them regain their losses.

Gold started the week at about $1,313 and by the time all things were settled gold was sitting at about $1,315.

Silver made a gain of over 70 cents as it started the week at $19.91 and ended at $20.62.

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.

Gold and silver experienced mixed fates this week as gold made small gains and silver posted some modest losses. The two most important and watched news stories of the week included economic data out of China and the Chairman of the Federal Reserve addressing the US Congress. As you can already tell from the minor movement gold and silver experienced, neither of these stories pushed either metal heavily in one direction or another.

The US Dollar Index fluctuated all week long and while one day it was up and wreaked havoc for gold, the next day it was down. This meant for an uneasy trading atmosphere for a large part of the week.

Chinese Economic Data

Seeing as there was little to no economic data released over this past weekend, investors and market watchers were chomping at the bit to get their hands on the Chinese GDP report that was due out on Monday. The news, as a whole, was a bit disappointing, but in reality the Chinese economy on a bad day is better than most others on a good day.

The first piece of data from the GDP report indicated that, on an annual basis, China’s GDP rose by 7.5%; a number that was about what most experts had anticipated. While that news wasn’t so bad, it was concerning to other investors that this past quarter was the second consecutive one where the Chinese economy experienced contraction.

Industrial output from China rose by about 9% in June, which was surprisingly a smaller increase than what was anticipated. Though it is clear that the Chinese economy is not booming like it was only a few years ago, the Chinese are not in as bad of shape as some people have been thinking.

Bernanke Addresses Congress

Apart from the Chinese data that was due out on Monday, investors were looking forward to the Federal Reserve Chairman, Ben Bernanke, and his addressing the US Congress on Wednesday and Thursday.

First up was the House of Representatives on Wednesday where Mr. Bernanke declared that monetary policy, specifically Quantitative Easing, is by no means on a preset course to being “wound down” or done away with by the end of 2013, contrary to many rumors. In fact, Bernanke said that if the US economy were to take a turn for the worse in the coming months, him and the rest of the Fed would have no reservations regarding boosting monthly bond-buying (Quantitative Easing).

While this news was initially taken as bullish for gold and silver, Bernanke’s Q&A session after his speech managed to revert all the gains gold and silver had made in the morning. All in all, the news was taken in and mixed reactions by the marketplace in general were yielded.

Demand for gold and silver was reported to have increased in Asia over the past week or so. This is good news considering Asian demand for gold and silver was at puzzling lows.

Weekly Move

Gold opened up the week at $1,286 and by closing time on Friday it was sitting at $1,295.

Silver, on the other hand, started the week at $19.98, and by the end of the week had dropped to $19.58.

While investors started the week hoping that metals would rebound from the massive losses they posted late last week, things turned out quite differently. Thanks to some comments by the President of the Atlanta Federal Reserve and weak demand out of Asia, gold and silver took massive hits for the second straight week. Each and every time we see gold and silver fall dramatically it seems as though metals have bottomed out, but each and every time we are proven wrong. Precious metals have not only had a bad 10 days, they have had a terrible first half of the year and even worse second quarter.

Federal Reserve Dictating Spot Value Movement

If you have been paying attention to the precious metals market lately, you are well aware that the United States Federal Reserve has had their hand in which direction and how drastically gold and silver have been moving. Last week saw Fed Chairman Ben Bernanke make some comments in regards to the future of monthly bond buying in the US, comments which caused gold and silver to drop in value rapidly. Bernanke stated that while monetary policy in the US will not be changed immediately, there is a good chance that things will be flipped on their head in the coming months.

Dennis Lockhart, president of the Atlanta Federal Reserve, announced on Thursday that the Fed will attempt to balance its budget and this means that QE and monthly bond-buying may soon become a thing of the past. If that is the case, gold and silver will lose a lot of their allure as safe-haven assets.

Weak Asian Demand

Historically, the summer months have seen Asia buy up physical gold and silver more so than just about any other part of the world. This year is not like most others in that demand for precious metals has been at a minimum in Asia and in most other parts of the world.

While a decline in the spot value of gold and silver tends to bring out bargain hunters in search of a cheaper market, this time is different. Investors are unsure as to whether gold and silver will stop their decline or continue to fall and has caused them to shy away from buying any metal, at least for now. Seeing as gold has lost over $200 in the past 10 days or so, you cannot really blame investors for not wanting to buy just yet.

India is a nation that loves its gold and silver, and due to a recently instituted tariff being placed on precious metals imports, the usually high demand has been struck down. Even the falling spot values of gold and silver are not enough to spur increased demand in India.

Weekly Move

This week, much like last one, has been marred by heavy losses for both gold and silver. While the early parts of Friday are seeing the metals fight back a little bit, what is done is done and losses have piled up very high.

Gold started the week at $1,298, and by closing time on Friday was sitting at $1,235.

Silver started the week a little over $20, and by the end of the day on Friday it was resting around $19.70.

Gold and silver took huge hits this week in the wake of a monetary policy meeting that took place in the United States. Both metals lost unprecedented amounts of value despite the meeting itself yielding no major policy shifts. Friday saw the metals bounce back, but only by a very very small margin. Hopefully enough bargain hunters hit the market to alleviate some of the selling pressure we have been seeing, but even a massive increase in physical demand will not likely turn things around for precious metals completely.

FOMC Meeting

The Federal Open Market Committee, known as the FOMC, is the body of the US Federal Reserve who is in charge of voting on and deciding monetary policy in the country. Since the worldwide recession that hit back in 2008, the FOMC has instituted and stood by a policy known as Quantitative Easing. This policy involves the government buying massive quantities of bonds every month in order to pump money into the economy. The excess amount of funds that are entering the economy because of QE will effectively bring down the value of the US Dollar and thus improve exports. An increased number of exports means that the US economy would be boosted significantly. Since the institution of QE, it is safe to say that the US economy has recovered more so than most other prominent economies of the world.

The FOMC meeting that began this past Tuesday was supposed to decide what happens to monetary policy in the US going forward. The outcome of the meeting was pretty much no outcome at all as the FOMC decided that it will make no changes to QE. This inaction helped precious metals because a decision that ended QE would have been absolutely devastating.

Later Effects

Though the FOMC meeting itself did not make any changes to current monetary policy in the United States, Ben Bernanke, Fed Chairman, alluded to the fact that Fed Reserve bond buying may be wound down sometime soon. Market experts followed up this meeting by speculating that by this time next year, QE may be a thing of the past. Because of this speculation, the market is now convinced that QE’s existence is only temporary and thus have lost interest in safe-haven assets such as gold and silver.

Because the popular thought is that QE will be done away with and the US Dollar will gain in value significantly, the only viable option for investors is to sell. This is the reason why gold lost almost $100 in one day and silver lost over $2 in the same day.

Weekly Move

Gold started the week at $1,390 and by the end of the day Friday it has lost almost 100 dollar in value and is now sitting at $1,295.

Silver started the week a few cents over $22, and by closing time on Friday it was sitting at $20.09.

Gold and silver did a lot of moving this week, but all in all they finished on Friday close to where they started the week on Monday. Asian markets were a recurring theme this week much like they always are, and just as you would have expected the news was mostly negative for the region. The possible ending of easy money policies across the globe has been dictating a lot of investor action lately, and with a big meeting in the US next week, the speculation is already flying.

Asian Markets, Japan

Though to many investors it seems like a year ago, only one month ago the Japanese Nikkei Index was putting out some of its best numbers ever. This was great for those invested in the Japanese stock market and even prompted people to venture into an unfamiliar market. Shortly after those impressive gains, however, the Nikkei Index began to slip. At first the declines were minimal, 1 and 2 percent at a time, but the snowball effect kicked in and in a matter of no time the Nikkei Index was but a shadow of itself only a month ago.

Now we have seen the Nikkei Index lose over 20% of its value from last month’s highs and things are not looking like they’re getting any better. In addition to this, the Chinese stock market has been struggling as well. The only good news we can take out of Asia this week is the fact that the Japanese Yen made some decent gains against the US Dollar.

Easy Money has a Limited Lifespan

The main worry weighing on investors’ minds is the fact that easy monetary policies around the world may be coming to an end soon. If there is a widespread abandonment of easy monetary policy you can bet your bottom dollar that this news will be negative for gold and silver.

This issue is the biggest in the United States where Quantitative Easing has been the topic of conversation for the past few weeks. A couple weeks back it was announced that there is a strong possibility that QE will be brought to an end sometime this summer, though no actual timeline was ever announced. The Federal Open Market Committee (the people who dictate monetary policy in the US) is scheduled to meet this upcoming Wednesday, which means investors will be hanging on every last word from that meeting.

Weekly Move

Gold and silver did a bit of moving this week, but all movements were more or less mitigated come Friday because both gold and silver ended the week very close to where they started it.

Gold started the week at $1,381 and by the end of the day Friday it was sitting at $1,390.

Silver started the week at $21.65 and finished the week at $22.09.

Gold and silver were looking to have positive weeks by the end of the day on Thursday, but with the news Friday brought, metals almost immediately did away with all their gains. Troubles throughout Europe and Asia were also mainstays in the headlines this week, though these stories helped precious metals more than they hurt them. I suppose we will have to wait yet another week before we see gold rise above the $1,400 mark even though most people would have bet money on this week being that week.

Economic News Out of the US

A few weeks ago it was announced that the US’ current monetary policy, known as Quantitative Easing, has a strong likelihood of being done away with sometime this summer. The cryptic announcement which offered no real timeline means that investors and market watchers are going to be hanging on every bit of economic data coming out of the US for the foreseeable future.

This week marked the announcement of what many have been calling the most important economic report in years in the form of an employment report. Data from this report was expected to be positive with an increase of 170,000 non-farm jobs to be added in May while the unemployment rate was expected to remain put at 7.5%. The actual employment report was not too far off from expectations as 175,000 non-farm jobs were added in May.

This news almost immediately hit precious metals fairly hard as they both lost all of this weeks gains and then some. What looked like it was going to be a positive week for gold and silver has quickly turned around into quite the opposite.

European and Asian Disappointment

Over the course of the past few months you have probably noticed a regular pattern of disappointing economic outlooks from Europe. This week was no different as the whole eurozone seems to be suffering. With a European Central Bank meeting this week, many had hoped that some of the seemingly countless problems would be addressed. Instead, the ECB meeting brought with it no major monetary policy or interest rate changes. In fact, not even a minor announcement was made in regards to doing something about the state of the eurozone economy.

As we receive report after report of European economies likely contracting for the rest of 2013, it seems as though European leaders are content to let whatever happens happen. This has got to be irritating to the many people that live throughout Europe who are suffering due to their leaders’ inaction.

Japanese and Chinese markets also suffered this week as the Japanese Nikkei Index was in free fall for a large part of the last two weeks. Over that course of time the Nikkei Index lost about 18% of its value which is very worrying to anyone who has interest in or has invested in Asia. China followed the same path as Japan, but its market losses were not nearly as drastic.

The Week Ahead

As we look ahead to next week, there are very few huge headlining stories to look forward to. While some US economic data will be on the table, it is not expected to move the precious metals market too much. Other than that we will fixate our attention on both the Japanese Nikkei INdex as well as the US Dollar as both entities are important to watch when analyzing precious metals movement.

Weekly Shift

Gold started the week at $1,391 and on Monday many were hoping that the metal would eclipse the $1,400 mark for good this week, though those hopes were dashed early on Friday. When all was said and done gold finished at $1,383 , a loss of about 8 dollars.

Silver started the week at $22.33 and at the end of the day on Friday was at $21.69.

Gold and silver did a lot of moving around this week, but at the end of the day they finished it not too far from where they started. While Thursday saw gold and silver jump forward right out of the gate, Friday saw quite the opposite and early morning losses almost completely cancelled out Thursday’s gains. There was a large amount of US economic data for investors to talk about and ponder over while Asia and Europe also made some headlines that caught the eyes of precious metals investors.

US Economic News

Tuesday, the unofficial start to the week because of the Memorial Day holiday on Monday, saw a decent portion of economic reports being released in the United States. Among Tuesday’s reports were the Housing Price Index, Manufacturing Index, and Consumer Confidence Index. All three of these reports were positive for the US economy but none more so than the Consumer Confidence Index which was at a 5-year high.

Thursday’s economic reports, including the 2nd quarter GDP report and the weekly jobless claims report, were weaker than expected, though not by any substantial amounts. Weekly jobless claims increased which was a bit disheartening, but on the whole the US economy seems to be doing just fine.

Since the Federal Reserve chairman addressed Congress last week about the future of Quantitative Easing in the United States, investors all over the world have been eyeing up US economic data with added scrutiny. It seems as though the next few weeks of economic data in the US will have substantial impact on whether QE is retained or wound down this summer.

Nikkei Index and Europe

The Japanese stock market has been performing extremely well ever since the nation’s central bank announced that it would employ aggressive monetary policy only a short while ago. This all changed this week as the Nikkei Index under performed heavily. On Thursday the Nikkei Index fell by over 5% and over the course of the past week losses came in around 15%. While Asian markets were performing better in the early parts of Friday, it seems like this week will mark one of net losses for the Japanese stock market.

Early in the week we reported increased unemployment in Germany which was confirmed later on during the week when eurozone unemployment came in at +12.2% in April. This number sets a record high for the region.

Germany, the EU’s leading economy, also reported a decline in retail sales for a third straight month. Despite all these negative news stories, European stocks did not have a terrible run of form this week.

The Week Ahead

There are not too many headlining news stories to look froward to for the first week of June, though investors will be paying close attention to every bit of data from the United States. Since the future of QE is up in the air at this point, investors are under the impression that the next 2 to 3 weeks of economic data, including the USD and stock market indexes, will have a major effect on whether QE is kept around or done away with.

Weekly Shift

Because the United States took the day off on Monday in order to celebrate the Memorial Day holiday, opening numbers will be from Tuesday.

Gold started the week at $1,395 and by the time all was said and done on Friday, it was at $1,390. This is a loss of 5 dollars. Silver started the week at $22.70 and when trading was done on Friday it was sitting at $22.28. This was a of 42 cents.

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.