Gold and silver are trading up on the final day of the week after a majority of this 5-day trading session was none too favorable for metals. Contrary to what so many people thought would happen, gold and silver were able to continue their rally once markets opened on Monday. Gold was swiftly approaching the $1,340 threshold and, only a day later, profit-taking made an appearance. Though investors were not welcoming the profit-taking with open arms, it was encouraging to see metals only decline slightly before rebounding again today.
This week was light from an economic standpoint, though we were greeted with a few pieces of data from China and the US, as well as some insight into the sentiments of the FOMC with regard to their tapering of QE. In all, metals are going to finish the week just slightly ahead of where they started it. A good sign for those hoping metals can hang on to this near-term momentum.
Mixed Worldwide Economic Data
As was the case last week, this week’s trading session also offered very little in the way of market-altering economic data. With that being said, however, the US did emit quite a few reports this week, the only problem being that the final tally saw some reports beat market expectations while others fell well short. The one piece of data investors did key in on was the weekly jobless claims report. The reason for this being that the number of people seeking unemployment benefits declined for the first time in a few weeks. This news placed some downward pressure on metals Thursday, while giving the US Dollar a bit of a boost.
The other key economic report released this week came from China in the form of the preliminary manufacturing PMI reading for February. After January’s final reading of 49.5 spurred the discussion of possible contraction in China’s manufacturing sector, investors hoped that February’s preliminary reading would show whether January was a fluke month or if it was a sign of things to come. Investors more or less got their answer in the form of a preliminary PMI reading for February of just over 48. This news was not only worrisome for those invested in any facet of China’s manufacturing industry, but worrisome for precious metals investors as well due to the fact that China is the world’s largest consumer of gold and silver for use in manufacturing. Thanks to this preliminary reading, investors will be anxiously awaiting the next batch of Chinese economic data.
Finally, the last noteworthy happening of the week came in the form of the FOMC’s latest minutes. Though nothing major was revealed within the minutes, members of the FOMC made it clear that it is going to take more than a week or two of sub-par economic data for them to consider putting a halt to their continuous tapering of QE. This news was adversarial to precious metals investors who were, up until this week, growing in confidence that tapering would be slowed down.
Despite some of these factors working against precious metals this week, the take-away from this 5-day trading session is that gold and silver are still in a strong position. Hopefully they can continue to build upon their near-term momentum and turn this small upward trend into a more lasting period of gains.