November 13th Midweek Gold Market Update

Gold and silver have continued last week’s declines amid a much quieter trading atmosphere this week. While the end of last week saw a somewhat shocking announcement made by the ECB, the former portion of the week was full of surprising economic data out of the United States.

Now there is a growing belief that QE, the United States’ monetary policy, will be tapered before the year’s end. Of course this is mere speculation at this point, though the recent run of positive form by the US economy is helping boost that speculation.

US Economic Data and What it Means for Gold and Silver

In the early parts of last week, while investors were speculating about the outcome of the upcoming ECB meeting, the US’ 3rd-quarter GDP report was released. Though it was expected that GDP, for the third-quarter, was expected to rise by about 2%, actual figures showed annualized GDP shooting up by almost 3%. This news helped boost both US stocks and the US Dollar while simultaneously putting hefty downward pressure on gold and silver.

The GDP report was not the only economic data released last week either, as October’s employment report was also catching the attention of investors. It was expected that non-farm payrolls in the US would rise by about 120,000, though actual figures came in above 200,000. This news, like the GDP report, gave the US Dollar even more strength. With the US Dollar sitting at multi-month highs right now, it is unlikely that gold and silver will have any real room to make positive gains this week.

Furthermore, investors in both the United States and abroad are growing in confidence with regard to the tapering of Quantitative Easing. The once widely held, and then subsequently abandoned belief that QE would be tapered before the year’s end is once again making a comeback. With members of the Fed calling for more consistent economic data out of the world’s top economy before they entertain the tapering of QE, last week’s news was just what the doctor prescribed. Now it becomes a waiting game in order to see if the Fed will, in fact, make any sort of reduction to QE. At this point, those who are confident that the monetary policy will be wound down are pointing towards the December FOMC meeting as a likely time where we will hear of tapering.

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