After the initial days of this first full week of November saw gold continue along its slight decline, some bullish news was reported on Wednesday. This news helped gold and silver inch into the green for the first time since the middle of last week. Tomorrow’s European Central Bank meeting has been one of the only things being talked about this week, and today we received fresh news on what the outcome of the meeting might be.
In other news from around the world, the euro was finally able to stop its decline on Wednesday, after a few days of steady losses. Along with gold and silver, US stocks were up right from the beginning of the day on Wednesday. Bargain-hunting also helped keep the spot values of gold an silver above negative as retail prices for gold and silver took hits since the early parts of last week.
Mood Shift in Regard to ECB Meeting
Late last week and continuing into the early parts of this week, the spot values of precious metals were on the decline as a direct result of a possible shift in European monetary policy. Due to incredibly low inflation rates and slow economic growth in countries whose name isn’t Germany, many market experts subscribed top the belief that the ECB would cut its key interest rate at this week’s meeting. The news spread like wildfire and before anyone could blink the spot values of metals were declining, along with the euro currency.
According to reuters.com, “Market News International said an ECB rate cut was unlikely, despite a drop in euro zone inflation.” This comes in direct opposition to popular belief, though the sources Market News International cited were undoubtedly credible.
Now it comes time to see just what the ECB has up their collective sleeve. People have been calling for action to be taken by the central bank in order to spur more economic growth since the summer, though little has been done to satisfy this request. Now it is crunch time, as a reduction of the ECB’s key interest rate will spell further losses for gold and silver, while a retention of current policies will likely cause an upswing in spot values.
Fed to Retain QE?
John Williams, president of the San Francisco Federal Reserve bank, made a statement saying that the FOMC should wait for stronger, more consistent evidence of economic growth before they part ways or even reduce Quantitative Easing. This statement comes on the heel’s of last week’s report which indicated that QE might just still have a chance to be tapered before the end of the 2013 calendar year.
This news may have also helped gold and silver make their small gains on Wednesday.