Market Recap: Week of 05/24/10 – 05/28/10

June 2nd, 2010 by

Precious metals had a tough time competing with stocks this past week.  Global indices fluctuated with marked volatility as market participants kept their eyes glued to the television screen in anticipation of an official statement of the intention of the The People’s Bank of China with respect to the Euro.  Investor uncertainty in Euro-denominated investments was quelled, at least in part, by the central bank’s announcement earlier this week that it would continue its support of Euro securities.  As a result, the Dow dipped below 9,800 Tuesday only to make a comeback to close Thursday at 10,258.99.

German parliament’s announcement last Friday to hold up its end of the now $1 trillion Euro bailout was welcomed with a sigh of relief by investors worldwide.  It is expected that this, while not entirely alleviating concerns over Eurozone debt contagion, will certainly extend a measure of good faith, encouraging further investment in the Euro.  This was manifested by a more than 2 cent gain against the greenback Thursday.

The effects of increased faith in both the Euro and stocks alike could be observed over the last few days.

  • Gold: Gold slowed from a 3-day growth trend Thursday, but managed to gain a total of 3.2% this week.  In spite of better performance by other indices, the precious metal continued to fulfill its traditional role of a safe haven.  Gold closed at $1,211 Thursday.
  • Silver: Silver’s gains were not quite as high, as it grew only .88% to close at $18.47 Thursday.  Higher elasticity of demand continues to rear its head globally as investors interested in riding out Euro uncertainty by holding onto precious metals looked to Gold instead.
  • Palladium & Platinum: Platinum gained over $25/oz. toward the end of this week after experiencing a major decline from earlier this month.  Palladium followed closely with an over $20 increase in the same time period.

While this week’s performance in global markets was a welcome change from the activity observed over the last few weeks, we’re still not out of the woods.  Close attention is being paid to the situation in Europe and how the actions of sovereign governments within the union – most immediately Spain – will affect Euro performance on the whole.