Precious metals are backing down after a few consecutive days of gains, but there is still a good amount of risk-aversion present in the marketplace. Whether it be the Ebola pandemic, declining crude oil prices, or stock market volatility, the market is playing host to a good amount of investors who are unwilling to take many risks. As such, the selling pressure, though a factor today, has and continues to be limited.
This week has thus far been fairly quiet, but over the last few days we have been given some economic news from the United States, China, and Europe; all of which was pretty worrisome. Now, the market is wondering whether metals will be able to hang on to gains to make this a second consecutive positive week, or if things will back down to the levels they were at prior to this week and last week.
US Economic Data Comes Back Poorer Than Expected
While there has been plenty of poor economic data for the market to mull over in recent months, very little of it has been poor economic data from the United States. Unfortunately, however, yesterday brought about just that. According to reports, US retail sales for the month of September were down by .3% while September’s producer price index declined by .1%. No experts were expecting either of these figures to be too drastically upbeat, but seeing them in the negatives was a shock to most everyone.
As a result of the data, both the US Dollar and US equity markets took noticeable, sizable hits. As you might have guessed, the precious metals market jumped forward considerably yesterday, and though prices have taken a backwards step today, the continuing subdued nature of US equity markets means that the precious metals bulls might finally be gaining some tangible momentum. It will be interesting to see how the duration of this day and week play out with regard to precious metals spot values.
From China, an inflation report indicated that year on year inflation levels remained steady and have not moved much. This is not necessarily worrisome, but does cause a large number of investors to fear that inflation could soon become a problem in Asia’s biggest economy. As we look ahead to the last day and a half of this trading week, all eyes will be on US equity markets, which have been home to some extreme volatility in recent days. With a number of factors spurring that volatility in conjunction with a growing belief that US stocks have finally topped out, investors are growing increasingly cautious by the day.