Precious metals prices took a sharp turn on Friday and recorded their largest single day gain in a while. Gold rose by 3.7% – the last time the price of gold increased by such a rate was back in August 8th 2011 when the anxiety levels in the markets were high over the U.S. debt ceiling debate. The disappointing U.S employment figures were the obvious catalyst for this sharp gain on Friday. This news may have rekindled the speculation regarding the future involvement of the Fed in the markets and whether the current economic situation warrants another quantitative easing program. If there will be another QE program it could reheat the current stagnate bullion market and drive prices up again. But will the Fed use the current news on the U.S economy to issue another stimulus plan? More people think so especially after the recent appreciation of the USD (because of the debt crisis in Europe), but I’m not sure the current economic situation warrants another QE program. I will refer to this issue in detail in another post.
Before the U.S non-farm payroll report came out there were several other U.S reports and weren’t too positive: the U.S pending home sales decreased during April; the U.S GDP for Q1 was revised slightly down to 1.9% growth, which is still a solid growth rate considering the slowdown in other countries including EU and China. These reports may have slightly affected the bullion market; nonetheless up until Friday both metals didn’t move much.
By the end of the week, gold spiked by 3.24% and silver rose by 0.44%. Here is a short recap of the changes in Bullion between May 28th and June 1st:
Precious Metals Recap:
Gold price edged down during the first few days of the week but spiked on Friday. During last week it rose by 3.24%; furthermore, during said time the average rate reached $1,574.84 /t. oz which is 0.38% above the previous week’s average rate of $1,568.94 /t. oz. Gold finished at $1,622.1 /t. oz.
Silver increased on a weekly scale by 0.44%; on the other hand, the average rate reached $28.09/t oz which is 0.09% below the previous week’s average $28.11/t oz.
During last week, the average daily percent change of gold rose by 0.65%; silver increased by an average daily rate of 0.1%.
The chart below presents the developments of precious metals, as their rates were normalized to 100 to May 25th. Bullion prices have edged down from Monday to Thursday but bounced back on Friday.
The second chart shows the daily percent changes of precious metals (or in other words the shifts around the trend). Bullion prices didn’t move much between Monday and Thursday; their recovery came on Friday. Their daily percent changes ranged between nearly 3.7% gain and 2% loss.