Gold and silver started the first full week of June on a positive note as both metals made solid gains in early, mid-morning hours. A mixed bag of economic news out of Asia did well to confuse the marketplace and it is slowly shaping out to be positive for precious metals. In addition to less than stellar economic news out of Asia, European economies are not faring too well either.
There are not too many economic reports to talk about this week, and the ones that are going to be relevant to precious metals will have to wait until Thursday and Friday to be released. The big thing that investors will be paying attention to is if gold will be able to surpass the $1,400 mark this week, and if it can get above $1,400, whether or not it will be able to stay there. Last week we saw gold eclipse $1,400 only to fall right back down into the $1,300s a day later.
Asian News to Report
Even though Saturday and Sunday are not, strictly speaking, business days, China felt that this past Saturday would be the perfect day to announce its latest Purchasing Managers Index. The report was surprisingly positive for China which saw its PMI rise from 50.6 in April to 50.8 in May. Two tenths of a percentage point does not seem like a large PMI gain, though with China struggling as much as it has been lately anything positive is good news. The official PMI for China rose between April and May but the manufacturing PMI for Asia’s largest economy declined between the two months. These mixed economic reports confused the marketplace and because of that, Chinese stocks fell in the overnight and early morning hours of Monday.
In other Asian news, we have seen Japan and its stock market surge over the past few months, but in more recent history the Nikkei Index in Japan has been struggling. On Monday the outlook on Japanese stocks was even more bleak as they declined in value in drastic fashion yet again. In not even two full weeks the Japanese Nikkei Index has fallen by over 17%. The decline in the value of Japanese stocks is becoming just as exaggerated as recent gains have been and has caused many investors and market experts to be convinced that Japan’s recent run of form is done and dusted.
Keep your eyes focused on the US marketplace too because if the Nikkei Index has fallen like it has, US stocks are, in some corners, expected to do the same.
Uncertain Eurozone Economics
Just as China had a Purchasing Managers Index report to release this past weekend, the eurozone had one to release on Monday. The difference between China and Europe’s PMI is that, while both rose, Europe’s still ended at what most would consider to be a less than pleasing number. The Eurozone’s PMI was 46.7 in April and rose to 48.3 in May, an increase of 1.5. This is a substantial move forward, but the negativity in the numbers lies within the fact that any PMI under 50 indicates a contraction in the economy. Despite the Eurozone economy seemingly contracting for two straight months, the increase in PMI may be an early sign that the Eurozone is recovering, if nothing else.
A European Central Bank meeting this Thursday will do well to help investors in the region gain a better understanding of just how well, or bad, the economy is doing.
Looking Ahead
As we move forward into the first full week of June, there is a light serving of economic data set to be talked about on the week. The two headline stories that we are going to hear about won’t be released until much later in the week. On Thursday we have the European Central Bank meeting to talk about and on Friday a US unemployment report takes the cake.
