Precious metals started the day on Wednesday more or less stagnant, though both gold and silver were able to make minimal gains. Weak economic data out of Europe has added to the compounding pile of disappointing European news that will hopefully be addressed in some fashion at the upcoming European Central Bank meeting tomorrow. Today is another crucial day for gold as it began the day over the $1,400 mark, but it is still uncertain if the yellow metal will be able to retain this position.
European Economic News
It is no secret that economies across the eurozone have been struggling recently, and the latest bit of economic news confirmed that yet again. Retail sales across the eurozone were down by half of a percentage point this past April, and down over 1% from the same point last year. Markit, a data company from Europe, reported that its gauge of manufacturing and service in Europe is coming in at 47.7, which is better than the posted 46.9 this past April. While these numbers may mean nothing to you, any number reported under 50 suggests that the economy in question is contracting.
This news comes as no surprise as the European region has been struggling economically for the past year or so. Hopefully the European Central Bank’s meeting that is taking place tomorrow will address some of the seemingly endless issues facing Europe, though I wouldn’t and am not holding my breath.
Bleak Asian Outlook
About a month ago, the Japanese Nikkei Index was booming and every investor was taking notice to the fact that Japan was sporting one of the best economic runs in the world. That all seems like a year ago now because the last two weeks have been absolutely brutal for Asian stocks, specifically Japanese stocks.
Last week was one giant decline for the Nikkei Index, and while we saw some improvement yesterday, the Index tumbled yet again on Wednesday. Over the course of the past two weeks the Nikkei Index has lost about 18% of its value, truly an unprecedented number. As if it weren’t enough that the Japanese stock market is doing badly, their bad run has caused other Asian markets to suffer lately.
Perhaps part of the reason behind why gold and silver were able to make minimal gains in the early hours on Wednesday can be attributed to a weaker US Dollar. Overnight the USD suffered as the Japanese Yen made decent gains against it.
Looking Ahead
As we move into the final two days of the first full business week of June, we are awaiting news and meetings from both Europe and the United States.
On Thursday, like we have already mentioned, the European Central Bank is set to have their latest meeting. It is not clear what the main topic of their meeting will be, though if I were to guess it is going to have something to do with the current state of the collective European economy.
On Friday we will be talking about a US unemployment report that will be announced sometime during the day. Last week we saw an unexpected rise in jobless claims which increased the investor intrigue in this upcoming report.