October 8th Midweek Silver Market Update

Precious metals are holding steady to slightly lower during the first half of the day on Wednesday. Thus far this week, metals have received a lot of upside support simply due to the fact that prices are so low bargain-hunters can’t seem to help themselves. There isn’t all that much economic activity on the slate this week, but, with that said, today’s release of the Federal Reserve’s minutes from last month’s meeting will draw plenty of attention from global investors.

Last week, in case you didn’t catch it, the US Labor Department’s employment report for September was made public. Prior to the report’s release, the market was expecting to see a job increase of around 215,000–a healthy number for monthly non-farms job growth. When the actual figures were made public, however, the report showed that almost 250,000 new jobs were added to the economy in September. This news, as you could have probably guessed, immediately boosted the values of the US equities as well as the US Dollar. While the movements upward were drastic, the first few days of this week has seen most of those gains parred. It will be interesting to see, later today, what kind of impact the Fed’s minutes will have on the wider marketplace.

Poor EU Data Increases the Worries Held by Investors

Though there hasn’t been much data on the slate this week, what little data has been made public has come from Europe and has been particularly poor. Just yesterday, a report was released claiming that German factory output in August declined by a whopping 4%. Market experts were expecting a decline in German factory output, but their expectations were for a decline of about 1.5%. As a leading EU economy, most experts and investors look to any and all German data as a gauge for the overall strength of the EU economy. As it stands, it is safe to say that the wider EU economy is in rough shape. What’s more, plenty of investors are and have been concerned about the growing deflationary pressures that have been a concern for some time now.

In the coming weeks and months, the eyes of the world will be on Europe and, more specifically, the European Central Bank in order to see what, if anything, they do to combat a weakening economy and ever-rising deflationary pressures. For precious metals, the weak EU economy isn’t necessarily terrible, but it is not providing much support at all. The reason being, a weak EU economy has driven investors to become more interested in US equities as well as the constantly appreciating USD. So long as wider investor interest is captured by other asset classes, the safe-haven qualities provided by precious metals will really not do much to interest a wide variety of investors. Instead, we will likely continue seeing what we have seen this week; prices so low that bargain-hunters simply can’t resist buying gold and silver.

Posted in Market News

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