Did Anything Change This Week For Precious Metals?

[Some thoughts about how this week's economic reports relate to the future of gold and silver prices.]

In what some had referred to as a “Super Bowl of economic reports” prior to the real thing scheduled for Sunday, a host of conflicting data about the U.S. economy has been revealed in recent days.

As a result, financial markets in general have been whipped to and fro, particularlt the monetary metals of gold and silver that, as always, move higher or lower based on whether it appears the central bank will print more or less money.

Holders of popular exchange traded funds such as the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust (SLV) have had a roller coaster ride this week.

This can be seen clearly in the graphic below from Kitco in which New York trading has resulted in the gold price surging and falling before surging again over the last three days.

But did anything really change this week for precious metals?

Wednesday’s first look at fourth quarter GDP growth revealed a surprising, though quite modest, contraction in the U.S. economy that no one predicted. The gold price jumped almost $20 an ounce that day and the silver price surged nearly $1 an ounce as markets were reminded of the impact lower government spending (in this case, defense spending) might have on growth.

Should the short-term “debt and deficit holiday” being experienced in the U.S. in the wake of the fiscal cliff deal lead to no deal on averting the spending cuts set to go into effect on March 1st…

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