While we saw both gold and silver make substantial moves forward on Monday, the early parts of Tuesday saw both metals return all the gains they had made barely a day earlier. Investors were happy to see gold finish Monday above the $1,400 mark by a decent amount, but upon waking up on Tuesday were disappointed to see that things were almost back to where they were last Friday. A stronger US Dollar coupled with stronger Japanese stocks both helped to put downward pressure on both gold and silver. Despite Japanese stocks finally seeing some good gains, Chinese stocks were still suffering from sub-par economic data that was unleashed over this past weekend.
Positive OECD Report
The Organization for Economic Cooperation and Development had a positive report to announce for the second consecutive month, though this month’s report was even better than last month’s. The report indicated that the developed nations around the world saw their Consumer Price index rise by only about 1.3% in April, compared to the 1.6% annual increase we saw for this past March. Rising inflation is never really viewed as a positive thing, but the world’s central banks and those that run them tend to agree that any annual rise in inflation under 2% is negligible.
The reported low inflation rates will likely prompt central banks across the globe to continue their easy money policies. Though easy money cannot continue forever, so long as inflation stays low in light of nations printing so much money, it can at least stick around for the time being. Despite this, I do not anticipate that the US will back away from winding down Quantitative Easing in the near future, though anything could happen.
More Disappointing European News
As if you weren’t already used to hearing nothing but disappointing economic news out of Europe, the EU announced that producer prices fell by over half a percent in April. This decline is the largest Europe has seen in about four years. This news only made investors and market watchers become more anxious for the European Central Bank’s meeting this Thursday. Hopefully the latest installment of the ECB meetings can bring about some sort of plan to help the European economy out of its misery.
After the US Dollar traded at four year lows on Monday, it bounced back with a vengeance on Tuesday. This single bit of activity helped put a lot of downward pressure on precious metals. The other happening that did nothing positive for gold and silver was the fact that Japanese stocks posted solid gains for the first time in almost two weeks.
Rest of Week Roundup
Though there are not too many huge headlines to await for the remainder of the week, Thursday and Friday should be interesting. Thursday we will witness the aforementioned meeting of the European Central Bank and any market-relevant news that it may bring. Friday we switch our attention to the United States and an unemployment report that is set to be released and talked about. Last week’s unexpected increase in US jobless claims means that investors and anyone interested in the US economy will pay close attention to this Friday’s announcement. Investors are increasing the amount of attention they pay to the US in the wake of Ben Bernanke announcing that Quantitative Easing may be done away with in the the near future.