Gold and silver have performed much better than expected up to this point during the week, and the early morning hours on Thursday could prompt the start of some solid gains to close out the month of May. We have seen Asian stock markets hit a bit of a speed bump while US economic data has shown positive result after positive result. Though this was a short week as the United States took the day off on Monday in order to celebrate the Memorial Day holiday, gold and silver have made some drastic movements. Almost immediately falling when markets opened on Tuesday, it looked like precious metals were doomed from the start, but some late gains Wednesday and early on Thursday helped right their path and even give investors hope that this week may end up being a positive one for both gold and silver.
Asian Market Outlook
Over the course of the past month or so, Asian markets have been doing extremely well, mostly due to aggressive monetary policy instituted in the region. Perhaps the most impressive of all Asian stock indexes was the Japanese Nikkei Index. On Thursday, however, the Nikkei Index declined by 5% and over the course of the past week its combined decline was coming in around 15%. With Asian markets in temporary decline, gold and silver have been able to move into more of a safe-haven position for investors. Who knows how long this decline in Asian markets will last, but so long as it does precious metals will likely benefit quite a bit.
In other news, European stocks were showing mixed results on Thursday as this week has not been very favorable for anything having to do with European economies. A positive report about the growth of the eurozone economy from April to May helped save European stocks from having a wholly dismal day, but even this news was not enough to make the day a positive one. I know we have been saying this for what seems like a long time, but Europe is in desperate need of something, anything to help their ailing economy.
US Economic Reports
Ever since Ben Bernanke, US Federal Reserve Chairman, addressed Congress last week regarding the future of monetary policy in the United States, investors have been keeping their eyes on US economic data more than ever before. On Thursday two key economic reports will be released including the weekly jobless report and the 2nd Quarter GDP. It is expected that GDP will be up over 2 percent on the year, though time will tell if it is actually better or worse than this mark.
With the US economy looking like it is fully recovered from the economic collapse we experienced only a few years ago, many believe that Quantitative Easing is no longer necessary. Others believe that this recent run of good form by the American economy is nothing more than a fluke and hold that QE needs to be retained as our main monetary policy.
Closing Out the Week
Though the month of May is just about over, the summer months have just begun and are likely going to be incredibly interesting and eventful for investors of all types, but especially precious metals investors. As we move forward through the summer we will likely find out a lot more about the future of monetary policy in the US which will undoubtedly have a substantial impact on precious metals’ outlook.