Gold and silver spot values are mixed as of the writing of this post early Wednesday morning. The US Dollar as well as US equities are moving upward, so it is already looking like precious metals might have a tough day. As far as the week on the whole goes, the market is and has been preoccupied with Thursday’s European Central Bank meeting. Currently, investors are expecting the European Central Bank to make a policy change such that the Euro currency very well might decline even further than it already has.
Despite losing a good amount of value towards the end of last week, precious metals opened up things on Monday in impressive fashion. Unfortunately, Tuesday saw some of those gains parred as a stronger Dollar and stronger US equities took their toll on the precious metals market. In addition to the ECB meeting expected to be held tomorrow, the market will continue to focus on the spot value of crude oil as it will continue to have a direct impact on the price of gold and silver.
European Central Bank Meeting Takes Center Stage
Like was previously stated, there is no denying that the week’s marquis event will come tomorrow in the form of the next European Central Bank policy meeting. The ECB’s monthly meeting is always watched closely by investors, but this time is different due to the fact that so many people are expecting to hear of a shift in policy. Judging by recent comments made by ECB president Mario Draghi, it is widely expected that the EU will be subjected to QE measures instituted by the European Central Bank.
For those who are unaware, QE is nothing more than the purchase of government bonds aimed at stimulating an economy. In the US, QE measures were credited with playing a major role in the recovery of the US economy. If the ECB does announce the implementation of QE measures, I would be willing to bet that the Euro currency will decline in value. As such, the US Dollar is likely to gain value too, and this would be none too favorable for precious metals. Still, there is no guaranteeing that the ECB will make any shift in policy at this month’s meeting. Because of that, the global marketplace will be paying especially close attention to anything and everything the ECB has to say.