Most people attribute the month of August as a slow month in regards to trading due to the fact that a majority of people use this month in order to take vacations. While, up to this point, that sentiment rang true, the past week or so has been full of some interesting news stories. Violence in Egypt between Pro-Morsi supporters and police forces rages on, causing the overall death toll to skyrocket. In other news, investors of all types have been focusing in on what many are labeling the start of an Asian currency crisis. Finally, the Federal Reserve has found its way into the news yet again, once again in regards to monetary policy and its future in the United States.
Most of the aforementioned stories have done well to boost safe-haven demand for gold, though many of them are simultaneously tragic for the people whom the stories effect. Where gold and silver will finish the week is still a mystery, though if these prominent news stories are any indication, my guess would be that this is going to end up being another positive week for both gold and silver spot prices.
Asian Currency Issues
Last week, the only story on the minds of investors was that of the dramatic rise in the spot values of both gold and silver. Though it seemed like the only story at the time, the rise in spot values can be directly attributed to another story which most investors chose to overlook throughout last week. About a week ago, the Indian Rupee, the currency of India, began taking a drastic nosedive which saw the Indonesian Rupiah follow suite. These two depreciating currencies can be largely attributed to the catalyst for gold and silvers’ upswings, though at the time no one admitted this.
This week, the two currencies continued their decline as both currencies soared to record lows against the US Dollar. Now there is a growing fear that higher interest rates in more prominent economies is putting some heavy selling pressure on mid-level currencies, especially those throughout Asia. Despite the governments of the effected countries doing everything in their power to alleviate some of the selling pressure, the currencies continue to decline in value. We will be closely monitoring this situation for any further developments, though right now the situation in Asia is only helping boost the prospect of gold and silver as safe-haven assets, something that is widely accepted by precious metals investors.
FOMC Minutes
The Federal Reserve’ Open Market Committee is set to release the minutes for their upcoming meeting later today. While investors are hoping for some clarification regarding the future of monetary policy in the United States, such does not seem likely.
Nonetheless investors are speculating heavily and will be paying especially close attention to anything and everything the meeting’s notes have to say.
