Gold and silver both made substantial gains this week as the government shutdown, which has been dominating news headlines for the past two weeks, finally came to an end. Just one day before the US hit its debt ceiling, a situation which would see the US begin to default on its loan obligations and possibly have its credit rating reduced, Congressional leaders on both the Republican and Democrat sides were finally able to come together and reach deals in regards to both the debt ceiling and the budget.

While this last minute deal was a good thing for the 800,000+ laid off federal employees, it is only a temporary fix and will need to be readdressed only a few months down the road. This whole scenario has been all over the place and confusing for many, and the confusion will likely continue for some time.

What These Deals Mean for Precious Metals

Early this past Wednesday, stories broke claiming that Republicans and Democrats were on the verge of reaching a deal in regards to both the debt ceiling and the budget. By Wednesday night, those rumored deals came to fruition and the 16 day government shutdown finally came to an end. Correlating directly with the initial stories about Congress possibly having reached a deal was the upswing most markets experienced. However, once Thursday rolled around and people found out more about Congress’ deals stocks and the USD began to decline in value.

The reason for this decline was due to the fact that it was becoming widely known that Congress’ deals were only a temporary fix. The budget deal only funds government operations until the middle of January, while the debt ceiling was only raised until the beginning of February. Investors quickly became aware of the fact that the government shutdown we just witnessed may be played out all over again in the early stages of 2014.

This news caused the USD to fall to a 10 month low. Additionally, safe-haven demand for gold and silver is on the rise as both metals reclaimed enough value to be in more or less the same positions they were in before the shutdown occurred.

For the second week in a row, news headlines were dominated by the ongoing partial US government shutdown. In all, gold and silver did not fare well this week as both metals recorded losses. Gold, in particular, suffered major losses and is once more below the $1,300 threshold. With the US about to hit its debt ceiling, it  seems as though problems are mounting faster than they are being resolved.

The G-20 meeting of finance ministers kicked off yesterday in Washington DC, and as expected, the first day’s primary topic of discussion revolved around the US’ plethora of problems and how the scenario can quickly deteriorate into global economic panic. 11 days later and over 800,000 US government employees continue to be out of work with no real way of bringing a paycheck home to feed their families, though it seems as if Congress couldn’t care less.

In It For the Long Haul

If you thought that one week was enough for Congress to agree on a budget, boy were you wrong. Now, in day 11, we have to cope with the harsh realization that Congress is no closer to a budget agreement now than they were over 10 days ago. In fact, many people have described both Democrats and Republicans as “digging their heels in”, meaning that both sides are preparing for a long battle. With both sides as stubborn as ever, it is unsure where a solution will be derived from.

All of this is causing worldwide investor anxiety to rise. Markets have been very volatile while the precious metals market has seen more or less direct decline. So many people are curious as to why safe-haven demand for precious metals never set in amid the government shutdown, though the answer to that is seemingly simpler than most would have imagined. Because the US and the world has known about the budget deadline for well over a year now, the shock wave usually sent through the worldwide economic marketplace in the wake of something as large as a government shutdown just doesn’t exist. Instead, investors have been gearing up for the shutdown and were not the least surprised when October first rolled around and no budget had been agreed upon.

Now, the situation is evolving and will soon include the debt ceiling debacle, which will see the US begin to default on its loan obligations if the debt ceiling cannot be raised before October 17th.

If the debt ceiling deadline and the government shutdown overlap, investor anxiety will likely be transformed into investor panic and finally investors will see the safe-haven demand for precious metals spike that they have been long awaiting.

This week started out looking like it would be a positive one for precious metals, but after Wednesday that belief began to change a bit. An increase in violence in the Middle East seems imminent as a plethora of Western nations have begun to fixate their attention on the previous and ongoing atrocities in Syria.

Apart from the looming potential of war, this week was also characterized by some better than anticipated economic data. First, we saw the Business Confidence Index in Germany rise significantly for the fourth consecutive month while second quarter GDP in the US was reported as being markedly better than the first quarter. The Labor Day holiday, which takes place this upcoming Monday, is the official end of summer in the US and will likely mark the beginning of a busy economic and geopolitical news season.

Tensions in Syria Fluctuating

For the past two years or so, Syria has played host to a civil war which has claimed thousands and thousands of lives. The civil war is currently being fought between rebel fighters and the current government regime. The death-toll is already staggering, though what is even more frightening is the number of innocent civilians who have been killed by both sides in the fighting.

Many of the civilians who have not been killed have been displaced and are forced to live thousands of miles away from their homes in the absolute worst conditions imaginable. Though it seems as though Western nations should have stepped in in order to help the many civilians a while ago, it wasn’t until very recently that nations decided to get involved.

Recent allegations, which accuse the Syrian government of firing chemical weapons at their own civilians, have been brought to the attention of both the US and the UN. In response, the US and its many allies have decided that it is time to take some action in Syria. At the beginning of this week many people were convinced that a US-led attack would take place in Syria by the week’s end. This looming prospect of violence in Syria helped devalue the dollar and put selling pressure on stocks; both of which helped boost spot values of gold and silver.

As the week wore on, however, the seemingly imminent attack became less imminent and now Obama and his allies are unsure what their course of action will be. We will continue to monitor this situation and bring you all the latest developments once they are reported.

Gold and silver did some bouncing around during the week, but both metals managed to make it a positive 5-day session. Even though the end of August is supposed to be a quiet time of the year as far as trading is concerned, this week was particularly packed with news stories from around the world. While we continue to keep our attention locked on the ongoing violence in Egypt, some other stories out of Asia and the United States poked their heads into the spotlight during the week.

Though gains made this week were not anywhere near as substantial as the gains both gold and silver made last week, it was still a good week nonetheless. If nothing else, this past week has shown investors that gold and silver can sustain positive runs and are not solely limited to the isolated, one-day gains we have seen more often than anything else over the past half year or so.

Worries About Asian Currencies

Almost two weeks ago now, gold and silver embarked on an upswing that would see both metals make the large gains. At the same time as precious metals’ upswing, some Asian currencies began to depreciate quite rapidly. The two most notable currencies that took a dive were the Indian Rupee and the Indonesian Rupiah. Both currencies were falling almost in conjunction with the rise of the spot values of gold and silver. When the decline in value experienced by the Rupee and Rupiah first got underway, the story was overshadowed by the surging spot values of gold and silver, but at the beginning of this week, with the depreciation continuing, investors began to pay attention.

It was quickly figured out that the reason behind these currency declines was an incidence of higher interest rates in countries across Europe and North America. Higher interest rates have translated into heavy downward pressure being placed on both Indian and Indonesian currencies. The fear, however, is that the depreciation we have witnessed over the past two weeks will not be experienced by only the Rupiah and the Rupee, but by many mid-level currencies across the globe.

If this type of currency crisis breaks out around the world, the whole marketplace will be thrown into a havoc. The good news, at least for precious metals investors, is that stories like this do a great job of promoting gold and silver as being safe-haven assets. We will continue to monitor this situation and provide all the latest details when they emerge.

FOMC Minutes Hit the Press

The Federal Reserve of the United States seems to get their name in the news every single week, and this week is no different. This time around investors anxiously awaited the release of the Open Market Committee’s minutes from their upcoming September meeting. The overriding hope was that some light would be shed on what the future of monetary policy in the US will be, though investors were let down in that regard.

Instead, the minutes which were released exemplified a Fed who seems as though they have no actual idea what should happen to QE by the time 2013 comes to a close. Some think that the monetary policy should be wound down, others think it should be abandoned completely, and still others think that it should not be touched at all.

Hopefully the actual meeting, which takes place in a few weeks, will see a Fed that is in sync as opposed to the Fed we have witnessed lately.

Gold and silver suffered minor losses by the end of the day on Friday after a week that saw spot values of both gold and silver ping-pong considerably. The main pieces of information on investor’s minds were two stories that took place in the United States. The first of these stories was the Federal Open Market Committee’s scheduled meeting, which was set to take place Friday while the second was the release of the latest US jobs report on Friday.

Both stories were expected to be indicative of an improving US economy and thus adversarial to the spot value of gold and silver.

Latest Jobs Data

Usually, the end of the month brings with it a report on the status of labor in the United States, and this month was no different. Since last week investors have been anxiously awaiting the release of job data that, top many, was expected to be incredibly positive.

In the lead-up to Friday’s meetings, the general consensus was that non-farm payrolls were going to rise to the tune of 175,000. If this was the case, it was also anticipated that the overall unemployment rate would fall from 7.6% to 7.5%. While this would be good news for the average American citizen, this type of news would be negative in terms of the spot price of gold and silver.

When Friday came around the jobs data was released and actual figures came short of expectations because non-farm payrolls only rose by about 162,000. While this number was still good enough to bring the unemployment rate down by the expected amount, it was slightly beneficial for precious metals due to the fact that the data was weaker than expected.

Federal Open Market Committee Scheduled Meeting

Over the course of the past few months, you would be hard-pressed to look back and find more than two consecutive weeks where investors were not waiting to hear from the Federal Reserve’s Open Market Committee. This week did not break tradition seeing as the FOMC was set to meet on Friday to discuss monetary policy.

What was different, however, was the fact that no major news was expected to be announced. Instead, investors geared up for a meeting that would more or less reiterate what Ben Bernanke had to say to the world only a few weeks ago. Anxious investors had their prayers answered because the prepared text for Friday’s scheduled meeting was released early, on Wednesday. What was expected happened in that the FOMC more or less restated almost everything Ben Bernanke said a couple weeks ago. All in all the meeting and its prepared text was beneficial for gold and silver, though only slightly.

Gold and silver experienced mixed results this week as gold posted small gains while silver lost a bit of value. The two marquis stories of the week included a Chinese GDP report and Federal Reserve Chairman Ben Bernanke addressing the US Congress.

The US Dollar Index did not help precious metals out at all this week as it fluctuated quite considerably. One day it was up and the next it was down which meant investors had a very hard time reading the market.

Chinese Economic Data

While the Chinese GDP report was a bit disappointing, you have to take into consideration that China’s economy on a bad day is better than most other economies on a good day. The first bit of data from this GDP report indicated that Chinese GDP grew by about 7.5% on an annual basis. This number seems like a positive one but it was actually a smaller of a gain than originally anticipated.

The next bit of news was that China’s month to month GDP has decreased for a second consecutive quarter. This is not a good sign for the future and the fact that industrial output for June was also lower than expected in China it is safe to say the whole report was fairly disappointing.

Ben Bernanke to Address Congress

Apart from the Chinese data that was due out on Monday, investors and market watchers were also looking forward to Ben Bernanke, Federal Reserve Chairman, and his address to the US Congress. On Wednesday he spoke before the House of Representatives while he was scheduled to speak in front of the US Senate on Thursday.

In his report Bernanke indicated that monetary policy, specifically Quantitative Easing, is by no means on a predetermined path to being wound down or phased out. He actually confirmed that if the US economy were to take a turn for the worse in the coming months the Fed has no problem considering the possibility of boosting government bond-buying (Quantitative Easing).

This news was originally perceived as positive for gold and silver, but as Bernanke took questions in the wake of the speech, all gold and silver’s morning gains were returned. Bernanke’s address to the Senate on Thursday yielded about the same remarks as were made on Wednesday.

Weekly Move

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

Silver, on the other hand, started the week at $19.98 and by closing time on Friday had lost a little over 30 cents to be sitting at $19.58.

Gold and silver have experienced their biggest losses in some time this week thanks, in part, to some comments made by Federal Reserve chairman Ben Bernanke. A highly anticipated Federal Open Market Committee meeting more or less took all the headlines this week as investors were keeping their eyes and ears peeled for information on the outcome of the meeting. This meeting was of particular importance due to the fact that it was held in order to decide what the future of monetary policy in the United States will be going forward.

FOMC Meeting

The Federal Open Market Committee, more commonly referred to as the FOMC, is the body that decides monetary policy in the United States. Their latest meeting started this past Tuesday and concluded on Wednesday afternoon. The purpose of the meeting was to make a decisive decision on what the future of monetary policy in the US will hold. Current monetary policy that is in place has worked to bring the US economy out of the recession that the world experienced in 2008. This policy is known as Quantitative Easing and is the Federal Reserve’s monthly buying of bonds in order to pump the economy full of cash. The more money that is floating around in the economy, the less valuable the US Dollar will be. A devalued US Dollar will make out exports look more attractive which will in turn improve our overall economic standing.

Investors and market watchers are split as to whether they think QE has worked up to this point, but it is an undeniable fact that the US economy has improved dramatically since 2008. Leading up to this meeting the most popular thought was that monetary policy would be left unchanged in the US, and that is exactly what happened. The FOMC announced that QE will be maintained and that no big changes will be made in the immediate future. This news delighted precious metals investors as their gold and silver refrained from taking huge dips.

Bernanke Press Conference

Since the FOMC meeting was the main story on most people’s minds this week and it produced no major changes, you are probably curious as to how gold and silver declined by so much. The reason behind this is because of the press conference Ben Bernanke held after the FOMC meeting.

In this he confirmed that no major monetary policy changes would be right now, but then alluded to the fact that bond buying may be wound down sometime soon. This simple allusion caused gold and silver to take huge nosedives and turn this week into one of major losses for precious metals investors. Even though Bernanke made no official decisions, his small remarks were enough to send the marketplace into a frenzy. Hopefully an increased demand due to lower prices will help improve the value of gold, though it is unlikely that $100 gains will be made anytime soon.

Weekly Move

Gold started the week at $1,390 and by the time trading concluded on Friday it had lost nearly $100 and was sitting at $1,295.

Silver started the week a little over $22 and by the end of the day on Friday was sitting at $20.09.

Gold and silver had a fairly uneventful week in that they finished on Friday very near to where they started on Monday. We had plenty of economic news to talk about as Asia and other parts of the world had some terrible runs. On top of that, we saw investor fear of the end of monetary policy jump up by a lot. With few major news stories to talk about, we focused our attention, for the large part of the week, on world economic activity.

Easy Money Speculation

The large-scale pumping of money into economies around the world is one of the definitions of easy monetary policy. Currently, a number of countries are employing such tactics in order to help spur some economic activity that seems to be so hard to come by lately. So long as money is plentiful and easy to come by, gold and silver investors are content because the more money there is the more people will put their faith in gold and silver.

This may all change in the near future, however, as easy money policies may be brought to an end in countries across the globe. This is particularly true in the United States where, a few weeks ago, it was announced that their easy money policy, Quantitative Easing, may be wound down by the end of the summer. Since that announcement we have heard little about the future of monetary policy in the US, but with a Federal Open Market Committee meeting coming up this next Wednesday, investors are thinking we may be given some new news. It is not certain what the exact topic or topics of discussion will be, but what is certain is the fact that speculation will abound until the meeting actually happens.

Asian Market Happenings

Only about a month ago we saw the Japanese Nikkei Index take off and hit record highs. Investors were shocked at how quickly and ow dramatically the stock market in Japan surged forward, but few of them were complaining. Barely a month later, those highs have been lost and then some. The Nikkei Index has now lost over 20% of its value, with more than 5% of that being lost this week alone. This is obviously bad news for investors, but the fact that the Japanese Yen made some good gains against the US Dollar softens the blow of this story for some.

It isn’t only Japan that has been suffering, as China posted some disappointing stock market numbers this week as well. We will keep our eyes on Asia as we move forward just to see if the situation gets worse or begins to mend itself.

Weekly Move

Gold started the week at $1,381 and after a 5 days of ups and downs settled at the end of Friday at $1,390. Silver, on the other hand, started the week at $21.65 and made some decent gains to end at $22.09.

At many points this week gold and silver looked as though they were going to post solid gains by the time Friday rolled around, but the last day of the week had other things in mind for metals. A better than expected employment report did well to destroy both gold and silver on the final day of the week. Before Friday, and especially on Thursday, many were thinking that this would finally be the week we see gold finish the week above the $1,400 mark. Other than a few reports later on, this week was fairly quiet as far as huge headlines are concerned.

US Economic Reports

If you remember only a short while ago, you likely remember that US Federal Reserve Chairman Ben Bernanke made the announcement that monetary policy in the US might be changing sometime soon. The policy in question is Quantitative Easing and the popular thought is that it will be ended or wound down by the end of this summer. Because of that sentiment, investors and market watchers have been paying closer attention than normal to any and all economic news out of the United States.

This week there was an employment report which some have been saying is the biggest report of the summer and the year. It was expected that non-farm jobs would increase by about 170,000 while the actual unemployment rate was expected to stay at about 7.5%. The actual report, which was immediately negative for precious metals, indicated that 175,000 non-farm jobs were added in May, a number that exceeded expectations.

Before Friday gold and silver were looking fine, though afterwards it is very evident that both metals took big steps backwards.

Other World Reports

While the United States caught the majority of investor’s attention this week, there was still news to report out of Europe and Asia.

In Asia, the Japanese Nikkei Index, which has been collapsing lately, has fallen even further this week. Over the course of the past two weeks, the Japanese Nikkei Index has lost almost 20% of its value. During the midweek we saw some minimal gains made back which had investors thinking perhaps the tide was shifting, but almost as quickly as gains were made, losses were posted. Following in the footprints of Japan, Chinese stocks did not fare too well this week either.

We are all aware that European nations are having a tough go of things as far as economies are concerned, and this week saw nothing improve. Even though the European Central Bank had a meeting this week, the bank’s leaders did not even so much as address the many problems facing the countries in Europe.

What did come of the meeting, however, was the fact that monetary policy will remain the same as will interest rates.

Moving Ahead

As we move forward into next week the expected news is fairly light. While there are no major headlines to talk about, investors will keep their eyes fixated on the US economy and everything that comes along with it. The US Dollar will be the main thing to watch next week as it will tell us a lot about the direction precious metals will be heading in.

Weekly Move

Gold started the week at $1,391 and when all was said and done finished at $1,383. This was a loss of $8. Silver started the week at $22.33 and when all was said and done it was at $21.69. This was a loss of 64 cents.

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.