Precious metals opened up the day trending downward and things only got worse from there upon the release of some fresh third-quarter US economic data. Before we get into the fresh data, however, it is important that we reflect on what went down through the first three days of the week. Though there was a lot of economic and geopolitical talking points making rounds, most of it was ignored by the market due to the Tuesday-into-Wednesday meeting of the Federal Open Market Committee of the United States.
One of the biggest talking points, the declining nature of crude oil prices over the past few weeks, is worth mentioning because it was responsible for pulling all raw commodities down with it during the first half of this week. With experts thinking that crude oil will only continue to fall, there is no saying for sure what kind of elongated impact it will have on the precious metals market.
FOMC Presents Positive US Economic Outlook
While the FOMC meeting was important, the only thing investors really care about is the post-meeting statement delivered yesterday afternoon. According to the Fed, while there will still be “considerable time” before interest rates are raising in the United States, the US economy is definitely showing marked signs of improvement. The “considerable time” language didn’t do much to surprise the marketplace, but the fact that the Fed made such positive comments about the US economy did.
Now, instead of thinking that interest rates will be raised sometime next summer, many investors and analysts have changed their timeline, expecting rate hikes to come possibly as early as this upcoming February. Of course, that is still a long ways away, and anything can happen between now and then.
Third-Quarter GDP Defeats Expectations
Perhaps the biggest factor weighing on gold and silver came this morning in the form of another upbeat US economic report. According to the figures, the US economy grew by a far greater amount than was expected during the third-quarter of this year. Such data caps off the best 6-month run that the US economy has experienced in more than ten years.
Complementing the upbeat GDP figures was a report saying that fewer people filed for unemployment benefits during October than at any other single point in the last 14 years. Of course, this data goes perfectly with yesterday’s Fed statement and only worked to boost the US equity markets and act as a dead weight on the prices of gold and silver.