October 15th Midweek Gold Market Update

Precious metals quickly moved from near even to slightly upward after the release of some sub-par economic data. Thus far this week, things have been generally quiet due to North American holidays being celebrated on Monday (In the US and Canada), but there has still been plenty for investors to mull over and discuss.

As if it were to come as some as some surprise, more downtrodden economic data came out of the EU on Tuesday. In all, industrial production in Germany and across the region is down and has been for some time now. With this latest batch of poor economic data, the eyes of the investing world turn to the European Central Bank in order to see what, if anything, they are going to do to spur economic growth of any sort. While the ECB has already implemented policies aimed at spurring growth, we are now 3-4 months down the road and, clearly, not much progress has been made.

So long as things continue along the path they are on now, deflationary pressures will retain their firm grip on the wider EU economy. Things in Europe have gotten so bad that even the US Federal Reserve is hesitant to change their only policies for fear that it would slow down global and EU economic growth further. It will truly be interesting to see what direction the Euro Zone heads over the course of the coming days and weeks.

Poor US Economic Data Lifts Metals

When markets opened this morning, gold and silver spot values were trading near unchanged after a few consecutive days of gains. Then, shortly thereafter, some US economic data was made public and came back much weaker than expected, driving risk-aversion and, thus, the spot values of precious metals.

Among the reports was a US retail sales report for September which came in at down by .3%. While this data alone was disappointing, the producer price index for September in the United States was also down, by .1%. All in all, this data was much poorer than expected and ended up giving gold and silver a modest boost.

As you could have probably guessed, the weak US economic data had an immediate negative impact on the US Dollar as well as US equity indexes. Over the past few weeks, the equity indexes in the US have been home to some extreme volatility, and this too is helping drive risk-aversion forward.

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