As of the writing of this post early Wednesday morning, both gold and silver are conceding value after two days’ worth of gains. This week has already been fairly eventful and the market has been dealt a good bit of economic data. In addition to that, a good bit of investor attention has been paid to the movement of global equity markets. Through the first two days of the week, stocks in Europe, the United States, and elsewhere around the world have been on the decline and stocks are selling off at a rapid pace. This alone has helped gold and silver spot values considerably.
Looking ahead to the duration of the week, many of the same factors will be there for investors to discuss and mull over. There is still plenty of economic data on the table, and with some important central bank meetings on the horizon, there is ample information for investors to preoccupy themselves with.
Stocks Fall On Global Economic Concerns
A theme through the first few days of this week has been the decline of global equity markets, but most notably those in Europe and the United States. Thanks to crude oil being on the decline, energy shares have dipped considerably. For a point in time on Monday, the value of crude oil dipped below $50/barrel, and this caused the marketplace to delve into a sort of panic. Stock sell-offs ensued and this was enough to drive spot values of precious metals forward.
The concerns of investors extend far deeper than the momentary movement of crude oil to under $50/barrel. Investors really fear that the continued decline of crude oil’s value will, in time, cause severe price deflation for people all over the world. For this reason, gold and silver spot values shot forward due to the renewal of safe-haven demand on the part of investors. So long as the market is concerned about the future of the global economy, it is likely that spot values of precious metals will appreciate.
Holding metals back today, however, is a US Dollar that is continuing to surge forward. For the better part of the last 5 or 6 months, the USD has been making almost consistent gains against rival currencies. In recent days, the USD has made massive gains against the Euro currency and is expected to continue doing that as the weeks move forward. This is especially true due to the widespread belief that the European Central Bank, at their upcoming meeting, will announce the implementation of a government bond-buying program similar to the Quantitative Easing we saw in the United States over the last few years.