This week has been particularly quiet for investors, though spot gold and silver continue to decline. There have been very few new geopolitical developments and what economic data was released so far has had little impact on the spot values of gold and silver. Barclays announced a revision to its forecast for spot gold this year today, but it worked against gold and silver more than anything. In their report, Barclays revised their forecast for spot gold from $1,205 to $1,250. This is a significant revision but still sees the spot value of gold finish the year below its current levels.
Due to the lack of fresh news the market has been fixated upon how the Chinese central bank will combat recently weak economic and financial data. When the Chinese opened up 2014 in disappointing economic fashion, most of the world was convinced that it was nothing more than a temporary lull in the world’s largest economy’s outputs. Now, nearly 4 months later, the Chinese have still not recovered from their new year slump.
Quiet Week Spells Doom For Gold and Silver
After profit-taking and chart consolidation drove spot gold and silver down last week, many investors were hoping for a different story this 5-day session. Unfortunately, however, the lack of any new bullish data has done nothing but work against gold and silver. Profit-taking is still being seen across the market, and the overall outlook on gold and silver is beginning to deteriorate.
Last week, Janet Yellen made some statements that not only worked against gold in the short-term, but stand to work against the metals further down the road as well. While speaking to media, Ms. Yellen made it clear that she plans on having QE completely eradicated by the end of the year. To that end, she said that it would be none too surprising if interest rates in the US were risen as early as next spring. This news caught a lot of investors off-guard as most of the market did not anticipate rising interest rates until the summer of 2015, at the earliest.
The market is also concerning itself with what the Chinese central bank will do to combat recently poor financial and economic data. Adding to recent Chinese financial worries was a particularly poor report with regard to China’s manufacturing sector. It is becoming increasingly clear that the Chinese are slowly but surely losing control of their economy. If nothing is done to help alleviate the situation sometime soon, the Chinese will be dealing with much larger problems than they are right now.