Posted on January 06, 2016
Gold Spot Price Open: $1,082
Gold Spot Price Close: $1,096
Change in Gold Spot Price: +$14
Silver Spot Price Open: $14.07
Silver Spot Price Close: $14.09
Change in Silver Spot Price: +$0.02
Gold and silver moved forward on Wednesday, posting one of the best single-day performances of the past few months. When all was said and done, gold managed to gain close to 15 dollars while silver’s gains were more modest, at just a few cents. Platinum and palladium both moved downward on the day, with palladium accruing the biggest losses of the two metals.
During the early parts of this first week of 2016 trading, it is geopolitics that have been consuming the marketplace. First, tensions between Saudi Arabia and Iran have been stoked thanks to Saudi Arabia recalling all of its leaders from their Tehran embassy. This move was made in response to Iranian protestors, just days earlier, storming the country’s embassy after Saudi Arabia put a leading Shiite cleric to death for speaking out against the ruling family.
Now, on Wednesday, investors are concerned about the fact that North Korea announced that they had just successfully test-dropped a hydrogen bomb. Western intelligence claims that they have record of North Korea testing an explosive, but have said that the blast was not nearly large enough to be a hydrogen bomb. To put things in perspective, the blast of a hydrogen bomb is 50x, if not more, stronger than the bombs dropped on Hiroshima and Nagasaki.
Gold and silver are receiving a lot of safe-haven support as is typically the case in the wake of major geopolitical actions. As we look forward to the rest of the week, we will be paying attention to any and all relevant information regarding what actually happened in North Korea earlier this week. In addition, we are also going to be paying close attention to the rhetoric stemming from the Saudi Arabia/Iran situation.
As is typical, ADP released their reading on private job growth today. What was unexpected was the fact that ADP’s data showed that job growth during December was extremely upbeat, even though US economic data might lead one to believe that the last month of the year would have been negative across the board.
After moving upward by more than 210,000 in November, December’s private-sector jobs growth showed an increase of more than 250,000 jobs. This number may be surprisingly upbeat, but that is mostly due to the fact that December’s figures are almost always skewed upward due to an accounting quirk that occurs towards year-end.
According to Chris Rupkey, chief economist at MUFG Union Bank said, “The labor markets are finishing the year with a bang, that’s for sure. December was also extraordinarily warm as well, which means the number may exaggerate the labor market strength.”
Today’s ADP report was great and, as always, serves as a nice precursor to the government-supplied data that is due for release at the end of this week. As of now, expectations are for at least 200,000 non-farm jobs to have been created during the last month of 2015. If the actual jobs data lives up to expectations, 2015 will be the second-best year for job creation in the last decade. This is a major feat, and a simple fact that lends credence to the Fed’s decision to raise interest rates just a few weeks ago.
Wednesday was not a quiet day, but was not exactly bustling with activity either. Most investors are anxiously awaiting the employment report that is due out on Friday, as that will be the first of many key pieces of data going to be released in the coming days. I think that next week will be a big week as far as economic data is concerned, and that can either mean very good or very poor things for precious metals.