Gold and silver finally halted their decline in the overnight and early morning hours as the marketplace seems to be pausing after a week-long series of losses. Gold was up a few dollars while silver was up a few cents in the early morning hours of Thursday, something we have not seen for a while. Some weaker than anticipated US economic data could be the reason behind why precious metals stopped their downward slide and has actually caused some people to question whether the Fed should be hitting the brakes on monetary policy anytime soon.
Calmer US Marketplace
The investment atmosphere in the US is much calmer on Thursday thanks to a Wednesday revision to the 1st quarter GDP of the United States. It was anticipated that 1st Quarter GDP would be up by over 2% when the concrete numbers came in a little under 2%. The first quarter GDP report being worse than expected has prompted some people to be wary of the idea of the Federal Reserve winding down monthly bond-buying.
Despite this GDP report, most of the other economic data out of the US recently has been quite strong and indicative of an economy that is well on its way to recovery. For this reason it is still a widely held belief that monetary policy in the US is gearing up for some big changes, maybe even as soon as the end of the summer.
Asian Markets
This week has been one of ups and downs for Asian markets, though lately that seems to be a recurring theme. A possible cash crunch which has greatly diminished the spending each and every Chinese household is able to do is making investors worry about China and its prospects as the second largest economy going forward.
In addition to the possible credit crunch in China, physical demand for gold in India is very low. Typically, during the summer months, India is known to buy up a lot of gold, but a new tariff on imported precious metals is driving demand down. The Indian government placed a tariff on gold imports in order to help balance their trade budget.
The US Dollar Index is a bit weaker on Thursday after the greenback hit a multi-week high on Wednesday.
Price Movement
At the beginning of trading on Monday, gold was trading at a dollar or two under $1,300 and by the same time time on Thursday gold had lost a little over $60. This marks the second consecutive week of major losses posted by gold.
Silver did not fare much better as it began trading on Monday at $20.17 and by Thursday morning had lost well over a dollar to now be sitting at $18.85.