Gold and silver have done a lot of moving over the course of the past four days, and when all is said and done they finished more or less where they both started. US economic news dominated this week’s landscape as investors have been focusing in on North America more so than any other part of the world. With that being said, there was a decent amount of news to report from both Asia and Europe this week as well, though both regions performed badly this week. This is especially surprising because Asian markets such as Japan have been stellar as of late.
US Economic Reports
Since traders and just about everyone else in the United States took the day off on Monday in order to celebrate the Memorial Day holiday, our week actually got started on Tuesday. Both precious metals declined quite a bit in the overnight and early morning hours on Tuesday which got the week off to a bad start for precious metals investors. Things got worse when positive economic news was reported on Tuesday. The economic reports released on Tuesday included the Consumer Confidence Index, Housing Price Index, and Manufacturing Index. All three reports were positive in regards to the US economy, none more so than the Consumer Confidence Index which hit a 5-year high.
Thursday was another day this week where some market-relevant economic news was going to be released, though these reports were negative for the US economy. Both the 2nd quarter GDP report and weekly jobless claims came in worse than expected.
People have been stressing over US economic reports because it is these reports that will likely help determine the fate of Quantitative Easing in the United States. Last week’s address about the future of monetary policy in the US by Ben Bernanke indicated that decisions regarding QE’s future can be made as early as a few weeks from now.
Other World News
While the news out of the US dominated headlines for a majority of the week, there were still market-relevant news stories to report on from the rest of the world.
In Asia, a place where markets have been doing incredibly well lately, we saw the Japanese Nikkei Index decline heavily this week. On Thursday alone the Index dropped by 5%, which brought weekly losses up to about 15%. Friday saw the Nikkei Index regain some strength, though it is almost certain that this week will net negative gains for the Japanese stock markets.
As we move across the world to Europe, we find even more disappointing economic news. Germany, the EU’s most powerful economy, saw a rise in unemployment coupled with a decline in retail sales for the third consecutive month. To add insult to injury, the euro zone is currently boasting a record high unemployment rate of about 12.2%. Despite nothing but negative news coming out of Europe, European stocks were still somehow able to not drop by significant margins on the week.
Moving Ahead
As we move into the first week of June investors will keep their eyes fixated on any and all numbers coming from the US economy. Most heavily watched will be both the US Dollar Index as well as US stock markets. Though the economy in the United States seems to be doing quite well, especially in comparison to other world economies, it is still uncertain whether this recent run of form is going to be sustained or is merely a temporary fluke.
Weekly Move
Gold opened up the week on Tuesday at $1,395 and by closing time on Friday it was sitting at $1,390. This is a loss of about 5 dollars .
Silver started the week at $22.70 and finished the week at $22.28. This was a of 42 cents.