Gold Spot Price Open: $1,118
Gold Spot Price Close: $1,115
Change in Gold Spot Price: -$3
Silver Spot Price Open: $14.60
Silver Spot Price Close: $14.62
Change in Silver Spot Price: +$0.02
Precious metals fell again on Thursday, but losses were kept to a minimum thanks to some less than impressive US economic data. When all was said and done, gold lost about three dollars while silver gained only a few pennies. Platinum maintained a sideways trajectory on the day, but palladium fell dramatically, by over 20 dollars.
ISM Data Points to Slowing Manufacturing Sector
After performing well for most of the week, the Dollar backed down against a basket of rival currencies thanks to some lackluster economic data from the US. According to the Institute for Supply Management, US factory production slowed during the month of September despite expectations to the contrary. Though hovering above contraction at the present moment in time, the manufacturing sector of the US is being called into question. This data forced the Dollar to take a bit of a dip ahead of tomorrow’s all-important employment data from the month of September. Officially, the ISM’s gauge on manufacturing fell to 50.2 during September after a reading of 50.6 during August.
According to Stephen Murphy of Capital Economics, “The decline in the ISM manufacturing index … is yet another illustration of the devastating impact that the strong dollar and weak foreign demand is having on the battered factory sector.” So long as the Dollar continues to remain strong and other economies suffer the affects of an unfolding global slowdown we may very well see production continue to decline. Murphy went on to say that “things might well get even worse before they begin to get better.”
Attention Turns to Tomorrow’s Jobs Data
Now, the attention of the marketplace turns to tomorrow’s employment data from the Labor Department. As it stands, the overall expectation is that just over 200,000 jobs were added to the economy during the month of September. Should tomorrow’s data beat the expectations of the marketplace, we may see the Dollar appreciate even further. September was a more lackluster month than anything else and that is why expectations for job growth are just over 200k.
The reason tomorrow’s employment data is so important is because investors are convinced that it will have a major impact on how the Fed feels about raising interest rates this year. For now, most people are expecting that interest rates will be risen at some point within the next 2 months, but those expectations are grounded in speculation more than anything else. The Fed has commented that it would like to raise interest rates at some point this year, but are not going to make that move until market conditions can support it. If employment data tomorrow is anywhere above 203,000 you can bet that expectations will move closer to interest rates being raised sooner rather than later.
Wrap-Up
Gold and silver received some support on Thursday, but that support was seen more in the form of diminished losses than anything else. Gold and silver are still in a poor position overall as the general level of interest in precious metals investments seems to be on the decline. With raised interest rates still on the table, I do not envision it becoming any easier for gold and silver to make sustained gains. As for gold and silver’s fate for this week, whether Friday will be a positive or negative day will more than likely hinge on the nature of tomorrow’s employment data.
