After the first two days of this week were marred by complete and total losses on the part of precious metals, it is nice to see gains being made through the first half of the day on Wednesday. Fueled by some better than anticipated Chinese economic data, precious metals are working their hardest to fight off a growing risk-appetite exhibited by investors.
Prior to this week’s beginning, market analysts and investors alike were concerned primarily with the two addresses scheduled to be made by Janet Yellen to Congress on both Tuesday and Wednesday. Now in day two of her semi-annual addresses, the Fed chairperson will be heavily scrutinized during a forthcoming Q&A session with member of Congress. Apart from Ms. Yellen’s speeches, however, the market really isn’t choosing to give much of any attention to any other market or geopolitical developments.
Chinese Data Gives Metals A Boost
Though it is becoming painfully obvious that market bears are now in complete and total control of the precious metals market, it was nice to see metals offered some respite this morning. Before US markets even opened, a report from China surfaced claiming that the world’s second-largest economy saw its GDP grow by 7.5% in the second quarter, on an annualized basis. When compared to somewhat lofty expectations that GDP growth would be somewhere in the neighbor hood of 7.2%-7.4%, the data was welcomed with open arms by a Chinese economy that has really been struggling of late.
The upbeat data gave Chinese stocks a boost and also acted as an underlying bullish factor for precious metals.
Janet Yellen Addresses Members of Congress
After last week’s FOMC minutes failed to offer the market much of anything in the way of new information regarding the future of interest rates in the US, all eyes shifted to this week and her semi-annual addresses to Congress. Just yesterday, in the first of two days of speaking, Ms. Yellen reiterated what last week’s minutes had to say regarding Quantitative Easing. Despite this already being more or less known by most investors around the world, Ms. Yellen made it clear that the FOMC plans on being completely finished with Quantitative Easing by the time they meet for their October policy meeting. As you could have probably guessed, this data had little to no impact on the precious metals market.
Shortly thereafter, however, Yellen went on to say that so long as the US employment sector continues to show consistent signs of improvement, interest rates may be raised sooner rather than later. These hawkish remarks were perceived by the market as meaning that interest rates will be on the rise sooner than when they had originally expected them to. As a result, follow-through selling after Monday’s already substantial losses doomed gold, silver, platinum, and palladium to yet another day of somewhat significant losses.
In her address to the House Committee on Financial Services this morning, Yellen did not stray too far from the remarks she made a day ago. Now, attention will shift to Yellen’s Q&A session with members of Congress that should be taking place momentarily. It will be interesting to see how she handles some of the point-blank, tough questions that will assuredly be thrown her way.