Gold and silver have continued along their respective, extended declines on Wednesday as few factors were able to move precious metals spot values much. The continued surge exhibited by the US Dollar is preventing gold and silver from doing much of anything, and has been for the past 5-7 days.
Last week’s run of positive economic data out of the US as well as the decision reached by the European Central Bank at their policy meeting are two events still affecting the precious metals market this week.
Last Week’s Positive Economic Data from the US
Gold and silver started off the beginning of last week on the decline. In the lead-up to the European Central Bank meeting there was plenty of economic data released, most of which helped boost the US Dollar and hurt the spot values of gold and silver. The first piece of data released was the GDP report for the 3rd-quarter. While it was expected that annualized GDP for the third quarter would increase somewhere around 2%, the actual report showed that annualized GDP for the US in the third quarter had risen by 2.8%.
Later in the week, on Friday, October’s employment report was scheduled to be published. The market had expected to see non-farm payrolls increase by about 120,000, though actual figures showed an increase of roughly 204,000. Both reports, the GDP and employment, translated positively for US stocks and the Dollar, but hurt the spot prices of gold and silver. The fact that the ECB decided to cut interest rates also helped the US Dollar simply because the news caused a decline in the euro currency.
Now, investors are growing more confident in their belief that the US Federal Reserve will be forced to taper Quantitative Easing before the end of 2013. Up until now, most Fed members who opposed tapering opposed it on the grounds of inconsistent economic data out of the US. With the US economy emitting the impressive statistics it has been over the past few weeks, it seems as though it is only going to be a matter of time before the Fed alters monetary policy. It must be noted that many investors are pointing towards the FOMC’s December policy meeting as a possible time for monetary policy change.