Though spot values have leveled off a bit, both gold and silver are still very much on the decline. After last week’s strong run of positive US economic data and the decision reached by the ECB with regard to their key lending rate, things have gone downhill fairly quickly for the prospects of gold and silver.
Now, amid a quieter trading atmosphere around the world this week, gold and silver are still feeling the heavy downward pressure being placed on them by the surging US economy and Dollar.
Last Week’s Better Than Expected US Economic Data
With the end of the year fast-approaching, it is time for investors to begin speculating about what they think will happen to Quantitative Easing monetary policy. With recent economic data beating market expectations by a long-shot, the belief that QE will be tapered before we turn the calendars to 2014 is once again catching on.
Last week we witnessed both 3rd-quarter GDP and October’s employment report come back far better than what was expected. While 3rd-quarter GDP for the US was expected to rise by no more than 2.5%, the report showed that GDP had actually increased by a margin of 2.8% since last year’s third quarter. On Friday, October’s employment report showed that non-farm payrolls had risen by almost 100,000 more than expected. Compared to market expectations of about a 120,000 increased in non-farm payrolls, October’s employment report showed that payrolls had risen by about 204,000. These two reports are of extreme significance to the investing world, and because of them the US Dollar surged while the spot values of silver and gold dropped off quite a bit.
Since members of the Federal Reserve in the United States have been calling for a consistent run of economic data before they entertain the idea of tapering QE, investors are latching on to the idea that this most recent data is the beginning of that consistent run. Now, many investors are looking ahead to December’s FOMC meeting as the time when the tapering of QE will be announced. With little evidence to back that belief up, however, this is just mere speculation at this point.