Precious metals have begun the middle day of the weak moving more or less sideways, but definitely still feeling some selling pressure. Though they have been generally quiet, the first few days of this week have done precious metals no favors. The focus of the marketplace continues to be currency markets, and the US Dollar only seems to be getting stronger by the day. With little economic data expected to be released throughout the duration of the week, I expect that investors will continue to give currencies their undivided attention.
In other news, a ceasefire agreement reached by opposing sides of the conflict in Ukraine seems to be holding for a third day this week. As humanitarian efforts play out in order to get civilians the food, water, and medical treatment they so need, it will be intriguing to see if this ceasefire offers anything in the way of more sustained peace talks. With that said, the unstable nature of this conflict leads one to believe that renewed tensions and fighting are both just around the corner. With the situation in Ukraine being as subdued as it is currently, that is yet one more factor working against the progress of precious metals spot values.
Next Week’s FOMC Meeting Enters the Spotlight
With very few noteworthy talking points making themselves known this week, investors are naturally beginning to turn their attention towards the meeting of the Federal Open Market Committee, expected to take place next week. The reason this meeting will be so important is simply because there will undoubtedly be interest rate talk. What’s more, investors will also want to find out as much information as humanly possible about the imminent doing away with Quantitative Easing.
Just yesterday, a survey released by the San Francisco Federal Reserve indicated that many members of the Fed think investors are seriously underestimating just how quickly interest rates can be raised. Due to this report alone, the US Dollar was given a marked boost while the minds of many investors with regard to the future of interest rates in the US were made up for good. Also as a result of this week’s limited economic activity, the value of the Euro currency fell once more. As the United States continues to pursue tighter monetary policy, and the EU loosens theirs, it is highly likely that the current inverse relationship being displayed by the Euro and greenback will continue.
It will be interesting to see how the duration of this week plays out, though you can more or less expect that investors the world over will continue to pay attention to currency markets. Right now, the world’s monies are really dictating what happens in the global economy.
