Gold and silver posted minor gains on Thursday which are being credited, in large part, to short-covering. Today saw the European Central Bank as well as the Bank of England meet for their respective monthly policy meetings, both of which were mostly uneventful.
Yesterday’s ADP employment report will be overshadowed by the ever-important non-farm payrolls data from this past December. At the present time the market is expecting to see a rise in non-farm payrolls in the neighborhood of 200,000, meaning that any number straying far away from this expectation stands the chance of moving precious metals spot values.
FOMC Minutes Act as Non-Factor
The latest FOMC minutes were released yesterday afternoon and even though they were of the utmost importance to investors, they ended up being more of a non-factor than anything else. They painted a picture of a Fed who was in almost total accord with the recent decision to taper Quantitative Easing. The tapering decision made over two weeks ago sees the Fed purchase about $10 billion less bonds each month, beginning his month. The tapering decision initially put heavy downward pressure on gold and silver while simultaneously pushing stocks to new highs.
Now, investors are concerning themselves with the prospect of possible further tapering decisions made throughout this year. In the lead-up to the minutes’ release most investors were hoping to receive some sort of clarification with regard to the possibility of further tapering measures. When the minutes were finally made public they gave no real indication of whether or not the Fed plans on pursuing further tapering measures, but they did make it clear that a majority of the Fed has grown more confident in the overall strength of the US economy. This fact alone makes more tapering seem likely, though it is entirely too early to say for sure one way or another.
Tomorrow’s non-farm payrolls data is perhaps the most highly anticipated piece of economic data released this week. Market expectations are pointing towards a 200,000 increase in non-farm payrolls, but if yesterday’s ADP employment report is any indication of future reports that 200,000 expectation has a high likelihood of being bested. The US economy has been showing signs of increased strength in recent months and tomorrow’s non-farm payrolls data stands the chance of building upon that strength.