Gold and silver did little moving in the early parts of Monday as both metals are still feeling the impact that last Friday’s US jobs report brought about. With non-farm jobs increasing by a slightly larger than expected margin, gold and silver fell dramatically last Friday, relinquishing all of their weekly gains in a matter of no time. With little and light economic data out of the US this week, it is uncertain which direction gold is going to move in, though any movements are expected to be small. For the second weekend in a row China released economic data, most of which was much worse than expected. This is upsetting to many people as the downtrodden Chinese news is acting as a weight for precious metals. Last week investors hoped to see gold get above and stay above the $1,400 mark, though we would be lucky to see such things this week.
Chinese Economic Data
As of late, it seems as though the only economic news we have heard out of China has been far from positive. The news has been so bad, in fact, that many people are calling into question whether or not China is actually the world’s second strongest economy. Last week the marketplace in China was hit with a mixed bag of economic news from the weekend before, and it seems as though that will be the case this week as well.
Over the weekend the Chinese reported that its Producer Price Index fell by almost 3% this past May. Additionally, it was reported that imports to China in May were subdued by almost half a percentage point. The news was not entirely dismal as industrial production was up by almost 10% in May, but it must be mentioned that this number is weaker than what was reported this past April. Another, not entirely disappointing, news story was the fact that electricity output rose by about 4%, but just like was the case with industrial production, this rise in May dwarfed the gains we saw in April.
Japan Recovers, Slightly
Over the course of the past three weeks or so, we have seen the Japanese Nikkei Index be part of a wild ride. At first it was a series of ups and downs, but then things turned into a large decline for the Index as it lost about 20% of its value in a little over 2 weeks. Monday was quite the opposite for Japanese stocks as the Nikkei Index saw gains of about 5%. While this is a substantial move forward, the Index still has a long way to go before it even comes close to recovering the losses it experience over the past half a month or so.
This week will be a light one as far as US economic data is concerned, though Monday will see the president of the US Federal Reserve in St. Louis, James Bullard, speak about US monetary policy. It is still unclear as to exactly what he will speak about, but as a voting member of the Federal Open Market Committee his words will be listened to by all types of investors.
The US Dollar Index stood firmer on Monday than it was on Friday, but it is still not doing well. Late last week we saw the USD post some heavy losses that it may not recover from quickly.
Looking Ahead
As we look forward to the next few days, there is actually very few headlines to talk about. No major economic news is set to be released out of the US, Europe, or Asia, which means that stock markets and currencies will dictate much of the movement we see by precious metals. Hopefully gold and silver can recover from last Friday’s losses, but whether or not that will happen remains to be seen.
