Gold and silver have done very little movement on Tuesday morning, something that is quite to the contrary of what they were doing Monday morning. After substantial gains were made by both gold and silver on Monday, Tuesday saw a bit of a corrective pullback as little economic news was offered up on the table. In fact, few economic news stories is going to be the main theme of this week. Last week saw Chinese economic data and Ben Bernanke’s address to Congress as the main bits of news to latch on to, but no stories that fit the caliber of last week’s will be offered up this go around.
The US Dollar Index will likely be the main indicator of how gold and silver are going to act this week and because of this investors will be watching it intently.
Bernanke Addressing Congress Last Week
Though the news of Ben Bernanke speaking to the House and the Senate is nearly a week old at this point, it is still important that we mention it due to the lasting effect it had on the precious metals market yesterday. Bernanke was done speaking by the end of the day last Thursday, but it wasn’t until yesterday that the world marketplace was able to fully digest what he had to say.
Last Wednesday saw Bernanke step in front of the House of Representatives in order to speak in regards to the US economy and monetary policies. What Bernanke had to say surprised a lot of people because while the popular belief was that Quantitative Easing was going to be wound down or done away with by the end of 2013, the reality of the matter is that the Fed does not have a predestined plan for what they are going to do with QE. Quantitative Easing is a monetary policy employed by the US Federal Reserve which sees the Fed buy millions of dollars worth of bonds every month in order to pump money into the economy. This large-scale pumping of money works to devalue the US Dollar which then brings down the price of our exports. When our exports are cheaper the demand for them rises and this all translates into economic growth, or at least does so in theory.
Bernanke even went as far as to say that if the US economy were to take a turn for the worse him and the rest of the Fed would not have a problem with boosting QE. While initial reactions were limited, come yesterday the marketplace had made their decision that Bernanke’s remarks were positive for both gold and silver.
As this week carries on, there are few major news stories to latch on to and for this reason many are expecting gold and silver to remain about where they are today. Only time will tell if precious metals will stay put or make even more unprecedented moves.