Gold and silver are trading closer to even on a day when it is clear that technical bears are in control. After losing a fair amount of value on Tuesday, precious metals are continuing to suffer due to a lack of fresh, bullish economic or geopolitical input. In fact, looming fears with regard to the possible tapering of QE are working against both gold and silver spot values. The next time the Fed is scheduled to meet is next Tuesday, at which point many believe we will hear of yet another $10 billion reduction to QE.
The rest of this week will probably not be too much noisier than it has been thus far as there are just not that many pieces of economic or geopolitical news to talk about.
More Good News Out of the EU
Over the course of the past few months the only news we have heard from the EU has been good news. The many economies that make up the EU are beginning to turn things around and show signs that they are finally and assuredly recovering from the 2008 recession. A report published in the early morning hours showed that demand for 10-year bonds in Spain is on the rise. This story complemented a report released yesterday that said interest in Irish and Portuguese bonds is also on the rise.
While leading European economies like Germany have been keeping the whole of the EU afloat for some time now, most will be pleased to see some of the smaller, historically weaker economies do their part as well. The recent strength of European equities is also indicative of an economy that is growing at a rapid pace.
Even though demand for gold and silver is currently high, increased demand alone will not be enough to keep precious metals on sustained positive runs. To that end, the possibility of more tapering is also not helping gold and silver out at all. A Wall Street Journal report that was published a day ago said that it was almost assured that the FOMC will announce another $10 billion tapering move at next week’s meeting. The report goes hand in hand with two voting members of the FOMC saying that they want to see QE completely abandoned by the end of 2014. If QE is tapered by another $10 billion it will mean that in the course of just over a month the Fed’s bond-buying has been reduced from $85 billion per month to $65 billion.