Spot gold and silver are moving sharply higher today in the wake of yesterday’s FOMC minutes. To that end, the bearish technical posture that has plagued the precious metals market over the last few weeks has lightened up and, in turn, has lessened some of the selling pressure being faced by gold and silver. Whether this keeps up or not, however, is the real question that investors need answered.
In case you missed it, the end of last week brought about the latest US employment report from September. According to the US Labor Department, September saw more than 245,000 new non-farm payrolls added to the economy. Compared to expectations of a 215,000 new job increase, the data was far better than anticipated. As you could have probably guessed, the better than expected employment data provided US equities as well as the US Dollar a bit of a boost. With that said, however, the USD has not fared so well this week, and especially not in the wake of yesterday’s FOMC minutes.
Fed’s Dovish Minutes Confuse Market
Yesterday, as is always the case, the market was anxiously awaiting the release of the Federal Reserve’s minutes from last month’s meeting. When the minutes came out, they were almost immediately deemed by the market as being dovish for a number of reasons. For one, the FOMC articulated concern about economies other than the United States’ that seem to be doing particularly poorly as of late. While it is good to see the US economy besting the economy of its rivals, the fact that the EU and Japanese economic systems are doing so poorly may end up weighing on the future progress of things here in the United States.
In addition to concerns regarding global economies, some FOMC members cited a stronger Dollar as being a factor that could, in some time, weigh on the overall strength of the US economy. Because of all this, investors are becoming increasingly convinced that the FOMC might have to hold off on raising interest rates in the immediate future. In the wake of this data, the USD was delivered a blow, while bargain-hunters hit the market and began purchasing large quantities of precious metals. Now, it will be interesting to see if gold and silver will be able to retain the early week’s gains or if the still bearish marketplace will take them back.