Week of October 10th Gold Market Update

Precious metals are trading ever so slightly lower as of the writing of this post, but are poised to make their first weekly gain in more than a month. Though there wasn’t a whole bunch of economic activity to report on this week, what little economic data made its way to the table really shifted the way the marketplace perceives investments in physical precious metals. While the market is still definitely bearish with regard to gold and silver, the selling pressure has lightened up significantly and has allowed for a combination of bargain-hunting and safe-haven demand to drive spot values. upward.

From Europe, what little data we received was in line with that of other recent data and came back far poorer than expected. One report that stuck out was with regard to German factory output in August. According to the figures, factory output in the EU’s leading economy in August declined by more than 4%. While most experts were anticipating a decline, they were expecting the downturn to be somewhere in the neighborhood of 1-2%, not 4%. As we move forward, the eyes of the world will continue to be fixated on the EU economy and all data stemming from it.

Stock Market Volatility a Theme This Week

For some of last week and much of this 5-day trading session, US equity markets have been all sorts of volatile. While one day the S&P 500, Dow, and Nasdaq are trading upwards, the next day they were seen racing downward. Though it is not clear why such volatility is plaguing equities, it is clear that some investors are under the impression that the equity rally we have seen over the past many months may finally be coming to an end. Though there is no way to say for sure whether the stock market rally is concluding, early indications are that stock markets are, in fact, topping out.

Not helping equity markets at all was Wednesday’s release of the FOMC’s minutes from their latest meeting. According to many Fed members, the weakening of economies in Asia and Europe are a major contributing factor to the Fed’s reluctance to raise interest rates. Not only that, but other members of the Fed feel as though the USD’s recent rally will, sometime down the road, weigh on the economic growth of the US. As a result, most experts have changed their projections for interest rate hikes from next summer to the following fall.

This week’s data, albeit limited, has really paved the way for some bargain-hunting purchases as well as increased safe-haven demand. It will now be interesting to see if metals can hang on to this week’s gains as we head into the weekend and into next week.

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