July 30th Midweek Gold Market Update

Gold and silver spot values are trading downwards through the first half of the day on Wednesday, as some US economic data has already been made public. With geopolitics still making headlines, it will be interesting to see how investors weigh the large amount of data they will be receiving over the next few days. Of course, the biggest piece of news today is without a doubt the conclusion of the FOMC’s latest policy meeting.

Big Day of US Economic Data

While the Fed’s most recent policy meeting is scheduled to wrap up sometime this afternoon, this morning brought about the United States’ second-quarter GDP report. Beating all expectations, today’s US GDP report showed that the US economy grew by more than 4% in the second quarter on an annualized basis. Two major reasons behind the US economy’s second-quarter success were an increase in consumer spending as well as a surge in new business investments.

In the wake of this data, US equities were seen mostly rising. However, as the day has worn on, earlier gains are being conceded. Precious metals have been faring poorly all day long and are likely to continue doing so as the post-meeting statement going to be made by Janet Yellen stands the chance of convincing more investors that interest rates in the US will be risen sooner rather than later. As we anxiously await this afternoon’s statement, I expect that most investors will hold their positions and that equities as well as metals will remain where they are now.

In the following few days, there is a good bit more economic data scheduled to be released, including Friday’s US employment report for July. After June’s job figures beat market expectations by a long shot, most are expecting that July’s figures will do the same. If such is the case and this week is wholly positive from an economic data standpoint, I expect gold and silver spot values to continue losing value.

With that said, however, the continued violence in many parts of the world is a factor that very well might help support continued safe-haven demand for precious metals. Just today, more Israeli shelling destroyed part of a UN school turned refugee camp and killed at least 15 people who were taking refuge there. In Ukraine, fighting between Ukrainian military forces and pro-Russian rebels has intensified near the large city of Donetsk, which is near the MH-17 crash site. Russia has also been seen shelling Ukrainian forces from within their own country, an action that is sure to draw the ire of world leaders from the EU and the United States.

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