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In this week’s Market Report for Precious Metals we see gold and silver settling lower at the end of the week as the dollar gains strength. On Friday, May 6th, there were gains in precious metals after jobs data was weaker than expected, adding to beliefs that the Federal Reserve will not increase interest rates in the near term. Lower interest rates usually put pressure on the dollar, and therefore boost other assets, like gold and silver. In a speech, New York Federal Reserve President William Dudley said two U.S. rate increases this year were still a “reasonable expectation.” The Dollar Index was higher on Monday, May 9th, especially against the Japanese yen, which it was struggling against last week. Crude oil prices were also lower on Monday, trading below $44 per barrel. The large wildfire in Canada has caused oil production in the region to stop. There was also news from the Saudi Arabian government that the oil minister was fired. This is leading most to believe that there will not be any near-term cuts in oil production from Saudi Arabia. OPEC will meet again in June. News out of China shows that their exports fell more than expected in April, down 10.9% year-on-year.
Gold started out the week at $1296.50 per ounce, this was the high point of the week. By Thursday gold was down to $1275.75. On Friday we saw the rally from a weak dollar and jobs data, and gold ended up at $1289.00. The rally was boosted by payroll reports showing that the U.S. economy added the fewest jobs in seven months in April. Some investors were discouraged that gold did not break the $1300.00 mark. On Monday those gains were lost as gold settled back at $1267.40. UBS analyst Joni Teves noted that, “The bounce in the dollar has also contributed to the pullback, and this period is seasonally slow for gold.” It is likely that this downward trend will not continue for long. Most long-term investors believe that gold still has room to run.
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Silver started the week at $17.49 per ounce, and was down to $17.18 on Wednesday. On Friday silver rallied with gold and ended at $17.31. On Monday it settled at $17.09, wiping out a 1.2% gain from Friday. Silver is generally a good indicator of investor sentiment, and its slow rise relative to gold shows that mainstream investors are still not on board, this leaves room for investment as silver will continue to follow gold’s gains.
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Platinum followed the same trend this week, starting out at $1084. It hit $1056 on Wednesday and was up to $1072 by the end of Friday. On Monday it was down to $1047. Palladium also had a similar week, it started at a week-long high of $620 on Tuesday, and was down to $602 on Thursday. On Friday it was up only slightly to $604. On Monday palladium fell to $585, losing its footing above the $600 mark.
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