Gold and silver are trading down today amid a stronger world economic atmosphere. While last Friday’s weaker than anticipated employment report for December was worrisome to investors, most are now considering the data a small imperfection on an overall great run of US economic form over the last few months. Naturally, positive figures being seen in US equities and the Dollar almost always means gold and silver are going to have a tough day.
The World Bank also bolstered global equity markets when it announced that it underestimated how strong global economic growth will be this year. As we head into the last two days of the week it is looking more and more like precious metals have lost what little momentum they had coming into Monday.
US Retail Sales Report, World Bank Statement Improves Global Markets
Before trading even began in the United States today, European investors were witnessing one of the best days they have see in a while. Stock indexes across the EU were trading up and, thanks to a statement by the World Bank, may continue to do so. Towards the end of 2013, the World Bank had made its prediction with regard to how much worldwide economic growth we would see in 2014. While the World Bank’s initial prediction saw most major economies improving during 2014, their rate of growth was not expected to be anything to brag about. Now, the World Bank is saying that major economies around the world have reached a “turning point” and have the potential to use 2014 as a means of ushering in a new era of flourishing global economies. Of course this sounds all fine and good on paper, but we will have to check back a year from now to determine whether the World Bank had things right or not.
In addition to the World Bank’s prediction on 2014 economic growth, today’s release of the monthly retail sales report also helped the USD and equities in the United States. The upbeat nature of the report helped quell investor worries with regard to the strength of the US economy. Last week’s weaker than anticipated employment report for December caused investors to worry about the US economy as well as whether the Fed made the right decision when it tapered QE last month. For the moment it seems as though the US economy is carrying on well like it has been for the past few months, however, upcoming political happenings have the potential to threaten the US economy’s current strength.
Further Tapering A Possibility Still
Ever since the FOMC decided to taper QE by $10 billion this past December, the debate has raged with regard to whether or not the Fed will implement further tapering decisions throughout this year. With the US economy growing in strength and same too with the value of the US Dollar, many investors feel as though the easy money policies we have gotten used to are no longer a necessity like they were a few years ago. While up until very recently it was unclear whether or not the Fed had decided upon taking further tapering action, comments made today may clear things up a bit.
Two voting members of the FOMC were reported as saying that they fully support the complete abandonment of QE by the end of 2014. Though they are only two members, their sentiments stand a high likelihood of being replicated by many other members of the FOMC. Should tapering become more severe as the year wears on it will likely end up putting increasing amounts of downward pressure on gold and silver spot values.