Posted on March 08, 2017
Gold Spot Price Open: $1,218
Gold Spot Price Close: $1,210
Change in Gold Spot Price: -$8
Silver Spot Price Open: $17.58
Silver Spot Price Close: $17.22
Change in Silver Spot Price: -$0.36
Precious metals continued falling on Wednesday as some more upbeat employment data was dealt in the form of the ADP private-sector employment report. When all was said and done, gold ended up losing about 8 dollars while silver conceded roughly another 36 cents. Platinum and palladium began the day losing value, but finished the day near even.
As you are likely well-aware, this week is going to be a big one as far as employment data from the United States is concerned. Though the most important report is undoubtedly the non-farms data that is due out on Friday, there are a few pieces of data that will precede it, including the ADP private-sector job growth data.
Even though most people do not weigh too heavily into the ADP job growth report, it is always viewed as a way of gauging what can be expected from the non-farms data. Though the two reports do not always correlate, they are somewhat aligned more often than they are not. This week, those expecting to hear a rate hike announcement this month will be hoping that Friday’s reports is just as strong as today’s. According to the payrolls processor, the private-sector of the US economy tacked on 298,000 jobs during February. Compared to expectations of more than 100,000 fewer jobs to have been added, it is clear to see how this data is being perceived as being overly upbeat. Immediately following the release of this report, gold and silver fell to multi-week lows. In fact, both gold and silver fell to 5-week lows on the day.
As you might have expected, the US Dollar gained some ground as well. While only a few weeks ago the Dollar’s strength was having no noticeable impact on the upward trajectory of metals, we are now seeing more of an inverse relationship develop. Over the last few days, the greenback has been making nice strides forward as precious metals continue to concede value. If the next two pieces of employment data are as strong as what was released today, I would not expect gold and silver to make much of a recovery before week’s end. The only silver lining to all of this is that, if a rate hike announcement is made, precious metals may not suffer massive losses in its wake. This is so because investors seem to have more or less fully priced in a rate hike.
With all of the focus recently being placed on the Federal Reserve of the United States, it has been easy to overlook European monetary policy. The March meeting of the European Central Bank will take place on Thursday, and though inflationary pressures have been on the rise, the expectation is that monetary policy will be kept loose.
Though no major announcements are expected to come as a result of this week’s ECB meeting, it will still be hawked over by investors for any clues as to what the future holds for Eurozone economic policy. There are some folks who are expecting ECB president Mario Draghi to discuss when stimulus measures might be pulled back, but the likelihood of him mentioning any specifics is fairly small.
We may be entering the latter half of the week, but it is sure to bring about some fireworks. With the ECB meeting and a full slate of employment data yet to be dealt, investors will have plenty of info to chew on. Should the other 2 major employment reports match the strength of the ADP private-sector job growth data, gold and silver may be pushed even further downward. That much, however, remains to be seen.