Gold and silver have conceded some ground in the early parts of this week, though after the progress both metals made last week it makes more sense. Tuesday and today’s marginal losses have been attributed to mild profit-taking as well as a slight technical correction. Like last week, this 5-day trading session is shaping up to be quiet on the economic news front, with few fundamental inputs to talk about thus far.
Today will bring with it one of the week’s most highly anticipated pieces of economic data in the form of the latest FOMC minutes.
Precious Metals and Commodities Look To Continue Rally
Despite losing some value on Tuesday and a little more so far today, precious metals are still very much in control of their own near-term fate. The growing risk-averse attitude exhibited by worldwide investors is fueling safe-haven demand for metals, which is at its highest point in months. China, the world’s largest consumer of precious metals on an annual basis, has been reporting consistently strong physical demand for gold as of the last few weeks. So long as physical demand is combined with a risk-averse attitude, precious metals will have a hard time doing anything other than making gains.
Today’s FOMC minutes will attract more investor attention than any other happening this week. Due to recently poor economic data from the US, investors are hoping that the minutes will shed some light on whether the FOMC plans on continuing with their tapering of Quantitative Easing or not. While this is what the marketplace is hoping to hear, the reality of the matter is that the minutes will likely only see the FOMC reiterate their confidence in the rate in which the US economy is growing.
As we head further into the month of February, it is important for us to reflect on the progress of gold and silver so far this year. Since January, gold has gained more than $100 per ounce while silver is trending in the same fashion, picking up more than $2 per ounce. After losing nearly 30% of its value during 2013, gold is already looking like it is flipping the script this time around. Only time will tell if the near-term momentum precious metals are seeing will translate into a more extended period of gains.