June 4th Midweek Gold Market Update

Gold and silver are trading just slightly higher on Wednesday, pushed forward by some weaker than anticipated US employment data for May. With that said, it is clear to see that market bears are still in control, exhibited by the fact that spot gold has gained only a few dollars while spot silver is only up a few pennies. The investing world is being dealt a good bit of US economic data today, but the main focus for this week still remains tomorrow’s European Central Bank policy meeting for the month of May.

As has been the case for the past week or more, gold and silver spot values are being put under a lot of pressure. Not helping matters at all is the fact that the crisis in Ukraine has more or less disappeared from the market’s concern. While there is still plenty of unrest and violence happening throughout the eastern and southern parts of the country, investors are viewing matters as more of a regional issues as opposed to something the world should be paying attention to. Nonetheless, it will be important to keep an eye on the crisis as it always stands the possibility of getting out of hand for yet another time.

Weak US Economic Data Gives Gold, Silver Slight Boost

During most any other week, the United States’ employment data would be, by far, the most important piece of economic news making rounds this week. Unfortunately, however, the all-important European Central Bank meeting has filled that role during this 5-day trading session. Regardless, US jobs figures for May were released shortly after markets opened and came back a good bit weaker than what the market had been expecting.

Compared to the expected number of more than 210,000 jobs added in May, the report showed that only about 180,000 jobs were added to the US economy. The weaker than expected ADP employment report was a bullish factor for metals and is more than likely the reason that they have been able to make marginal gains thus far today. I am not expecting these small gains to stick around for long, but it is nice to see precious metals receive some respite from the last week or more of continuous losses.

Finally, rounding out the week this week is the European Central Bank’s monthly policy meeting for June. This meeting is important to investors every time it takes place, but none in recent history have been as highly anticipated as tomorrow’s. The reason for this is simple, most investors are expecting to hear the ECB announce future plans to implement new monetary stimulus measures. Due to rising and more severe deflationary pressures around Europe, the wider investing community has been calling upon the ECB to institute some sort of new monetary stimulus, the likes of which will help combat the deflating euro currency.

At this point it is still unclear as to whether new stimulus will actually be put into action or not, but that has not stopped investors from speculating what fresh stimulus might mean for the precious metals market. On one hand, there are those investors and traders who are under the impression that stimulus in any major economy will be a bullish underlying factor for raw commodities and thus, precious metals. On the other hand, however, there are those who see new stimulus measures putting pressure on the euro currency which will, in turn, likely give the US Dollar even more room to grow. If the Dollar picks up momentum it is more than likely that it will have an adverse affect on gold and silver spot values. Of course, this is all simply mere speculation and we will just have to wait until tomorrow to find out which of it, if any, is true.

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