Gold and silver began the day on Thursday posting healthy gains after the Federal Reserve’s Open Market Committee’s prepared statement. Despite some better than expected economic news out of the US, which brought the spot value of gold and silver down initially, both metals were able to regain their losses and then some in the overnight and early morning hours on Thursday.
While Thursday is not expected to bring with it any major economic news stories, investors and market watchers will be looking ahead to Friday for the FOMC’s meeting to actually take place in addition to the release of the latest US jobs report.
Job Report’s High Expectations
Tomorrow’s marquis news story is the latest US jobs report which is already being touted as good news. As of now, expectations are that non-farm payrolls jumped up by around 175,000 which would then cause the overall unemployment rate to fall from 7.6% to 7.5%. While a one-tenth decline in the unemployment rate may not seem like much, it is a great sign that the US economy is doing much better than it was even a year ago.
Despite the better than expected economic news that we saw on Wednesday, which included a positive GDP for the second quarter, gold and silver values did not fall by much and were actually able to make gains in response to the Fed’s prepared statement being released yesterday.
Fed Release Statement, Meeting to Come
For a large part of the day on Wednesday, gold and silver were posting modest losses in response to the better than expected economic data that was discussed above. Later in the day, however, the FOMC’s prepared text from their upcoming meeting was released and was well-received by precious metals investors.
The text itself more or less reiterated what Ben Bernanke had to say a few weeks ago. Stated in the text was the fact that the government’s $80 billion+ monthly bond-buying initiative, Quantitative Easing, is not on course to be wound down by the end of 2013. Rather, it was made clear that monetary policy in the United States will remain as accommodating as it has been for the foreseeable future. To put it simply, there are too many worries in regards to inflation being to low and rising mortgage rates for the Fed to take an ax to QE just yet. While they are not counting an end to QE in the next 12 months out, they are by no means expressing an urge to do away with it as quickly as some people were initially hoping or even expecting.
This is a very safe approach being taken by the Fed. Overall, the prepared text gave gold and silver a boost in the early morning hours of Thursday.