The spot values of gold and silver are backing down today after making consecutive gains through Monday and Tuesday. To be truthful, this week is not set to bring about too much in the way of markets-moving economic data, and as such, the attention of the marketplace will revert back to US equity markets as well as the USD Index. If you can remember, last week brought about nothing but losses for US stocks, and many feared that they may be in for a move downward. This week however, at least the first two and a half days, has seen equity markets bounce back in impressive fashion. Whether the corrective bounce will persist through the latter half of the week remains to be seen, but we do know that such positive stock market movements are currently limiting the buying interest in precious metals.
Some Chinese economic data was made public on Tuesday, and though it was almost completely upbeat, it showed us that the Chinese economy is, in fact, only a shadow of what it was a year ago. Yesterday’s data acted as an underlying bullish factor for all commodities, including precious metals, but did not allow metals to finish anywhere near their daily highs.
Earnings Reports Boost Equity Markets
As far as economic data goes, this week is going to be pretty light. With that said, however, there are a healthy number of 3rd-quarter earnings reports due out from a number of major corporations, and many of them have thus far proven to be far better than what the market was expecting. The bouncing back of equities and renewed risk-appetite being exhibited by investors is not helping precious metals at all, but through the first two days of the week, gold and silver have done a good job of adding value.
The last two days of the week are going to be extremely important and will more or less decide whether this 5-day trading session becomes a third consecutive week of gains for gold and silver, or if the bulls’ run will only be short-lived.
Also making rounds in the news are reports that the European Central Bank may be readying itself to announce a quantitative easing package for the EU. Such a move would be aimed at improving the stagnating aggregate EU economy, and would help the EU end the year in relatively upbeat fashion. With that said, however, I am not holding my breath simply because very few policy changes enacted by the ECB in recent months have done much of anything to spur real economic growth throughout the region.