Gold and silver are both showing positive gains on Thursday thanks to a lower USD index. Despite the marketplace more readily fixating itself on next week’s FOMC meeting and supposed reduction to QE, gold and silver are holding strong, at least for now. Some disappointing economic data out of China is likely putting a damper on precious metals’ rally, but it is still early which means there is plenty of time for metals to eek out more gains.

Downbeat Chinese Data

China. and most of Asia, have been somewhat struggling economically over the past few weeks and months. Rising short-term interest rates in China and inconsistent equity performance in Japan are just two of the main issues holding the Asian region back. In the overnight hours of Thursday yet another blow was delivered to the current strength of the Chinese economy.

China’s flash PMI, which was recorded as being 50.5 in December, was reported as falling below 50 to 49.6 in January. This is the lowest PMI reading for China in a half year and is unnerving to investors in the region. This kind of PMI suggests that manufacturing industries in China may be contracting or at least on the verge of doing so. This news translated into weaker Chinese commodities and also had a downward affect on European stocks as well.

Contrary to what is the case whenever PMI readings for the US or Europe are disappointing, a weaker PMI reading in China means for more downward pressure being levied against precious metals. Because China is the world’s largest consumer of gold and silver any poor economic performance will translate directly into a lower spot value reading, luckily the US Dollar is keeping gold and silver afloat today.

Europe Piling ON the Upbeat Data

Not every region of the world received a lower PMI reading as Europe’s increased from 52.1 in December to 53.2 in January. This is the best preliminary PMI reading that Europe has seen in nearly 3 years and adds to a long line of recently strong bits of economic data from Europe. Yesterday it was reported that demand for government bonds in Ireland, Spain, and Portugal is on the rise, something we have not seen since before the recession of 2008.

Currently, both the US and European economies are performing at a level we have not seen in some time. The hope is that 2014 will go as planned and be a year of overall growth the likes of which have not been experienced yet this decade.

Gold and silver are recording slight losses for a third straight day as most of the few fundamental inputs are working against precious metals. Prior to this week’s beginning, most precious metals investors were hoping that the tide might finally be shifting and that gold and silver would finally record solid gains. While Monday saw gold and silver gain value, the subsequent days have not been so favorable as most economic data from the US and around the world have been more beneficial for equity markets than they have been for raw commodities, especially precious metals.

To put things in perspective, the global economy is making gains at such a rate that even a disappointing banking report out of China was not enough to prevent worldwide and Chinese equities from having impressive days today.

Non-Farms Data Only A False Alarm

Last Friday was perhaps the most important day of the week to investors who were hoping to receive some fresh insight into how the US economy was performing after an extended holiday break. On the slate was the non-farm payrolls data from this past December. Despite the market expecting to see 200,000 payrolls added during the last month of 2013, investors were surprised to see that only about 74,000 payrolls were added. This news was a shock not only because it was far below market expectations, but also because it was the first sub-par economic report out of the United States in a relatively long period of time. The report also put a sizable dent in overall investor confidence in the US economy and thus propelled gold and silver spot values to make some decent gains.

Most precious metals investors were hoping to see gold and silver’s small bullish run towards the end of last week carry on through this week but were quickly disappointed. Despite gold and silver managing to post small gains on Monday, the next three days (including today) have worked out a bit differently for metals. With stock markets around the world performing extremely well it is going to take a large amount of fresh, bullish fundamental inputs to allow gold and silver any room to make solid, lasting gains.

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.

Gold and silver have both fared well on the first day of trading for this new year. Gold is up over 20 dollars on the day while silver has gained around a half dollar. An increased amount of physical buying as well as index rebalancing have both worked in precious metals’ favor while stocks have calmed down in comparison to their activity from a week or so ago.

Whether gold and silver will be able to build upon today’s gains or not is yet to be seen, but one thing that is for certain is that 2014 has gotten off to a favorable start for precious metals.

Back to Square One for Investors

Now that the holiday season is over for most of the world, normal trading will finally begin to resume. Despite today being quieter than normal on the trading front, investors are already beginning to return from their long holiday vacations.

Index rebalancing is being credited with giving gold and silver the boost they experienced today. Even though investors were enamored with stocks for the last month of 2013, most have sold off the gains they made and are reorganizing their portfolios for the beginning of the new year. Depressed gold and silver spot values are catching the attention of the investing world, something that is seen in the increased number of physical purchases over the past few days.

Physical purchases in Asia have picked up considerably as well, yet another factor contributing to gold and silver’s great start to the year. Stocks have been surging in the US over the past few weeks, but because investors are looking to rebalance their portfolios most will cash in on the gains made through stocks and reinvest in lower value assets, like gold and silver. After all, gold and silver spot values are so low at the present moment in time that many market experts are convinced the metals have nowhere to go but up. Nonetheless, however, fiscal issues in the US still loom and so too do concerns over whether the Fed will pursue more QE tapering measures throughout the course of 2014.

he marketplace was quiet for yet another day on Thursday as the Christmas holiday means that most people will be out of their offices until early next week at the earlier. Gold and silver were able to make some minor gains but are still coming in second best to US stocks which continued their bullish run today.

The holiday season means trading volumes are thin which also means that precious metals are going to have a hard time making any sort of substantial gains in order to pull themselves out of their recent, respective ruts. Though gold is over the $1,200 threshold, it is at one of its lowest points in all of 2013.

Holiday Trading Not Helping Metals

Gold and silver are not receiving any favors from this holiday season as a quieter marketplace is making it difficult for precious metals to move much at all. Not only that, but investors are exhibiting more of a risk-appetite that can only be satisfied by increased investments in US stocks. The bullish run that the Dow and S&P 500 have been on is impressive and highlights perfectly the new risk-on attitude the marketplace is exhibiting.

Gold and silver are safe-haven assets and because investors are on the offensive much more than they are on the defensive nowadays the need for precious metals is not as prevalent as it was only a few months ago. If QE is going to be continuously wound down throughout the year like so many people think it is, the outlook on precious metals is only going to get bleaker. Nonetheless, we will have to wait and see how 2014 pans out for gold and silver.

In other news from around the world, China’s economy was reported as having grown by over 7% in 2013. Market expectations were for the economy to grow by about 6% on an annual basis but the 7.6% growth beat expectations handily. Despite a good report of economic growth in China, Chinese stocks suffered on news of short-term interest rates continuing to rise. We will be keeping a close eye on China because short-term interest rates have been on the move upward for more than the past week, a cause for concern for more than just investors in China.

Gold and silver are down sharply on Thursday a day after the FOMC decided to taper is monthly bond-buying monetary policy, also known as Quantitative Easing. Though the market was expecting a tapering announcement to be made, most anticipated that the reduction in monthly bond purchases would be larger than $10 billion. Nonetheless, US stocks as well as the US Dollar rallied on the tapering news, something that put pretty heavy downward pressure on gold and silver.

Now, gold is sitting at a 6-month low after falling below the $1,200 threshold.

FOMC Decision, Statement Ultimately Bearish for Metals

After the FOMC meeting came to an end on Wednesday afternoon, Ben Bernanke addressed the public. What Bernanke had to say was not overly negative or positive for gold and silver, but shortly after his speech it became clear that the Fed’s decision and statement were not at all going to work in gold and silver’s favor.

The official decision made by the Fed this week was to cut monthly bond purchases by about $10 billion, beginning in January. The ten billion dollar reduction is actually double-sided in that the Fed is planning on reducing treasury bond purchases by $5 billion and mortgage-backed security purchases by $5 billion as well. Bernanke’s post-meeting statement also made it seem like he and the rest of the Fed plan on pursuing similar $10 billion reductions throughout the course of 2014 to possibly completely do away with the monetary policy by this time next year. Though this is how the market interpreted Bernanke’s statements, there is no saying what course of action the Fed will pursue during this upcoming year.

While gold and silver did not post any significant losses in the immediate aftermath of the FOMC meeting, Thursday was a different story. As soon as markets opened on Thursday it became clear that the US Dollar and US stocks were winners as a result of the FOMC meeting, while gold and silver were undeniable losers.

Now, with even more investors putting their investing funds into stocks, market experts like Jim Wyckoff at kitco.com are under the impression that the stock market run is nearing its end. With gold and silver declining to historic lows, Wyckoff’s intuition may just be spot on.

Later today the weekly jobless claims report is due out and it will be interesting to see if jobs data in the US will continue to improve or take a step backwards.

Gold and silver are both down from early week gains as technical selling is once again running rampant. Now, after a brief break from their prolonged declines, gold and silver are once again feeling the grip of market bears. Yesterday’s bipartisan budget agreement along with next week’s FOMC meeting are two events that are looking like they will hurt precious metals spot values more than they will help them.

Bipartisan Budget Deal Hurts Precious Metals

In case you missed it, US lawmakers came to a somewhat surprising agreement yesterday with regard to a permanent US government budget. The budget deal, the same one that caused a government shutdown back in October, is a positive for the overall US economy as there is one less geopolitical uncertainty for investors to concern themselves with. Less uncertainty in the market tends to foster a riskier investor attitude, something we are already beginning to see. This agreement is also positive because it means that the US government will not be forced into another shutdown like the one we saw only a few months ago.

The budget agreement may also give the FOMC more reason to announce a reduction of Quantitative Easing at next week’s policy meeting. Currently, there is a strong contingent of investors who are expecting to hear a tapering announcement be made at next Tuesday’s FOMC policy meeting. Despite the chance of a tapering announcement being made next week, however, it seems as thought the precious metals market has already adjusted to reduced Quantitative Easing. The reason for this is because the marketplace is expecting to hear of a QE reduction in the near future. This expectation means that when a tapering announcement is finally made the marketplace will not perceive it as a surprise decision and thus it will not have the type of adverse affect on the precious metals market as originally thought. Even if QE reduction is not announced until sometime in 2014′s first quarter, the market will not be shocked in the least.

With investors exhibiting more of a risk-on attitude nowadays, gold and silver are in need of an economic or geopolitical development that will inject some life into the currently lackluster spot values we are witnessing.

Though both gold and silver posted substantial gains yesterday, both metals more or less conceded those gains on a day of heavy losses for gold and silver. As the fear that the Fed may taper QE in the near future spreads across the marketplace, many investors are ridding themselves of their precious metals holdings.

Today emitted a hefty amount of economic data for investors to mull over, but the week is not quite finished as a key US employment report for November is expected to be released.

Upbeat Economic Data

Today’s economic data once again beat the expectations of the marketplace, something that was always going to work against gold and silver. The US GDP report came in stronger than anticipated while this week’s jobless claims dropped. Factory orders in the US were reported to have declined, but apart from that solitary report the rest were wholly positive.

This day of strong economic data will likely only further the belief that the Fed will begin to taper QE in the near future. What does the near future mean exactly? At this point it is hard to say, but many investors are pointing towards the December FOMC meeting as a possible starting point for the tapering of Quantitative Easing. Despite that, there also exists a strong contingent of investors who believe that QE will not be touched until some time in 2014. Despite all this speculation, the only time when investors will find out any concrete information with regard to the tapering of QE is at the FOMC meeting scheduled to kick off on December 16th.

In other news today, the European Central Bank convened for their monthly policy meeting. Though no major changes were made to lending rates or monetary policy in the EU, investors were tuning in to what president Mario Draghi had to say nonetheless. Draghi did not say anything overly shocking, and in the aftermath of his commentary the euro currency rose slightly.

Friday is likely going to be another busy day, as investors from all over the world will be awaiting the November jobs data from the US.

Gold and silver have both lost significant amounts of value today, though their declines have lasted well over a week now. After yesterday’s FOMC minutes were more bearish than anticipated it is unlikely that gold and silver will be able to regain momentum anytime soon.

The marketplace is continuing to digest yesterday’s FOMC minutes as well as beginning to digest today’s economic reports. While this renewed decline of precious metals spot values is terrible for those holding metals now, it has translated into bargain-hunting buying already.

Outcome of the FOMC Minutes

Yesterday came and went, but what happened during the day was of particular importance to investors. The FOMC’s latest minutes were due out a day ago, and what they had to say shocked the world marketplace. In the minutes, many members of the Fed made it clear that they would be in support of reducing Quantitative Easing at one of the next upcoming meetings. There is no saying whether this means that QE is likely to be reduced this December like so many people originally had thought, or whether it simply means that QE will be tapered before the middle of 2014.

Regardless of the tapering of QE’s official timetable, investors reacted and continue to react as though QE will be done away with in the very near future. The spot value of gold has sunk beneath the $1,250 mark while silver is showing equally disappointing numbers having dropped below the $20 threshold this week.

Despite yesterday’s FOMC minutes, some investors are still hanging on to the belief that QE will not be touched until jobs data in the US improves. If this is the case, the next few weeks’ worth of US jobs data will be heavily scrutinized by the majority of worldwide investors. It is interesting to see the world marketplace focus so heavily on one country’s monetary policy and its potential future, but with few other inputs able to move the value of gold and silver too drastically in one direction or another it really isn’t all that surprising.

The only other news to report on Thursday involved China’s preliminary HSBC manufacturing report, which showed a decline from October to November. Though the official reading was indicative of a healthy Chinese economy, November’s reading was slightly weaker than October’s which translated into more bearish news for precious metals.

After more than a week of consistent losses, gold and silver finally turned things around on Thursday thanks to a Federal Reserve chairman nominee’s statement made yesterday. Prior to today, robust economic data out of the US as well as the declining value of the euro currency were putting heavy downward pressure on gold and silver.

Though gold nor silver have made up for this past week’s losses, gains made early on Thursday are definitely a start.

Janet Yellen’s Remarks

Though most people have no idea who Janet Yellen is, she is becoming more important as each day passes as she is one of the nominees for Ben Bernanke’s position of Federal Reserve chairman. Yesterday, Yellen was scheduled to give testimony to the US Senate Banking Committee with regard to her plans if and when she is appointed fed chairperson.

Yellen stated that if she were appointed chairwoman, she would likely continue with Ben Bernanke’s policy of Quantitative Easing. She feel’s as though more economic stimulus is needed in order to push the US economy towards reaching its full potential. This news was welcomed with open arms by investors who have been looking for anything to shed a positive light on precious metals. Though Yellen’s comments were made on Wednesday, they were made so late in the day that the marketplace did not begin to digest them until today. It will be interesting to see how the outlook on QE tapering will change (if it will change at all) in the extended wake of Yellen’s statement.

Weaker EU Economic Data

In news out of the European Union, 3rd quarter GDP grew by only .4%. This was seen as weak news because the .4% increase was down almost a whole percentage point from the 2nd quarter’s 1.2% increase. This marginal GDP increase makes many believe that the EU’s decision to cut its lending rate was more then merited.

With deflation a focal point of most investors’ discussions nowadays, possible deflationary scenarios may see tapering of QE pushed back even further. This is coming only a day after the widely held belief that QE would be tapered sooner rather than later.

An improved Japanese GDP reading helped boost Japanese stocks, though it did not have much of an impact on precious metals.