June 5th Midweek Gold Market Update

Gold and silver made modest gains in the overnight and early morning hours on Wednesday, most likely because of a weaker US Dollar. Overnight the Japanese Yen gained some ground against the dollar as weaker Japanese stocks prompted a stronger Yen. European data released on Wednesday once again indicated that the eurozone as a whole is and will continue to suffer for the time being. With a European Central Bank meeting tomorrow, you would think that the continent’s leaders would be striving to come together in order to formulate some sort of solution for the ailing region.

Europe’s Struggles Continue

If you are like many investors who watch over the many European economies that make up the eurozone, you probably cannot remember the last sustained run of good economic form from the region. As of late all Europe has been doing is declining or stagnating and so far no one has come up with any sort of solution to remedy the growing issues.

On Wednesday it was announced that retail sales fell by about half of a percentage point in April when compared to March and declined by over 1% from April of last year. A data company from Europe, Markit, announced that its gauge of manufacturing and service sectors of Europe was sitting at 47.7 in May compared to a reading of 46.9 this past April. While these numbers may mean nothing to you, an important note to make would be that any number under 50 suggests that the economy being evaluated is contracting. This report is the second in two weeks which suggests that the European economy is contracting.

Japanese Nikkei Index Continues to Slide

Last week was a tough one for traders invested in Japanese stocks as the Nikkei Index took fairly large hits all week long. Things looked as though they might be getting better yesterday when the Index gained back some of its substantial losses, but today shows us that such might not be the case. The Nikkei Index posted even more downtrodden numbers on Wednesday to bring the Index’s two week slide up to an astonishing 18%.

Japanese stocks and bonds are faring so badly, in fact, that their negative output has had negative affect on other Asian markets. China and its stock market are continuing to suffer this Wednesday in the wake of a mixed-bag of economic news released last weekend and the bleak outlook of the Japanese market.

Rounding Out the Week

As we head into the last few days of the week, the same two things that we have been awaiting this whole week are still the two main pieces of news to look out for. On Thursday we will see what materializes from the latest European Central Bank meeting, especially considering that the region has a plethora of issues to address.

On Friday, investors and market watchers will be paying attention to a US unemployment report. Unemployment reports are always important pieces of information when assessing the US economy, but even more emphasis will be placed on this particular report as last week saw an unprecedented rise in jobless claims. With the future of monetary easing in the US up in the air, every and all reports coming from the world’s largest economy will be watched over with increased scrutiny.

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