Gold and silver, after a surge in price last week which was brought about by the
influence of the Euro devaluation, has begun trading this week lower as more data is
emerging that suggests the US economy is slowing down.
The spot price of gold was down .84% during intraday trading on Monday,
trading at just over $1600 per ounce with a morning high of $1623.10 per troy ounce.
Silver lost a little more ground with a decrease of 1.81% and a spot price at $28.16 per
troy ounce. Price references for both precious metals were relatively unchanged from the
previous week and the trend line showed a continuation of market dynamics as they were
before massive devaluations in the euro caused a flight to the US dollar and a subsequent
pop in gold.
The fundamental dynamic in the price of gold and silver right now is the data, any
data, emerging concerning the US market and economy. Last week the jobs report had
a significant impact on the gold and silver market as it was held to be a very strong
indicator of where the market is on fundamental basis. This week the economic indicator
is the new factory orders, which have decreased during the month of April, constituting
a third such decrease in four months according to the Commerce Department. Orders
placed for manufactured goods were down as much as .06% on the month in April where
economists had expected a 0.2% April increase.
This is very raw and significant data concerning the state and health of the US
economy and what we’re seeing right now is the reality behind what was the optimism
of the recovery. It was only a few short months ago that’s investors were again getting
exuberant over relatively insignificant increases in jobs reports and financial stocks were
posting eight-month highs. The reality is major buying bases have not resumed activity
and the reports and data must eventually show that.
It should be remembered that after the financial collapse in 2008, gold and silver
did not initially spike in price. Following the collapse of Lehman Brothers, the price of
gold actually decreased to $681 per ounce, though it then did begin its legendary upward
trend where it eventually reached an all-time nominal high of $1923.60 per ounce in
September 6, 2011.
As such, we should take the current economic data that’s coming out and not
expect an immediate price reaction and precious metals but certainly understand the
overall dynamic will bring the prices of gold and silver higher in the time to come.