Precious metals this week have not done all that much moving, mostly because there hasn’t been too much economic data to speak of. We have had a lot of focus geared towards the ongoing Greek debt negotiations, but these talks have failed to really have all that much of an impact on the market…at least for now.
As we look ahead to next week, the investing world will be paying close attention to the latest meeting of the US Federal Reserve. With interest rate hikes a source of constant debate, it will be interesting what the Fed has to say next week.
Light Week of Economic Data
For the most part, this week was devoid of most markets-moving economic data. There simply weren’t too many reports to speak of and, as such, the market did not have all that much to react to. From the US, however, an existing home sales report from the month of March showed that the housing market in the US is continuing to improve. With a lower unemployment rate, more and more people are feeling financially secure enough to make home purchases. This news fell in the camp of those who believe interest rates will be hiked sooner rather than later.
In Europe, March’s composite PMI report came back far weaker than originally anticipated. Still sitting in a fine position overall, the PMI data did catch some investors off guard. This is especially so because we have seen nothing but upbeat report after upbeat report from the European Union in recent weeks.
In Brussels, talks between Greek officials and members of the International Monetary Fund continued this week, though very little progress has been made. The fact of the matter is that Greece is facing a cash crunch that may mean that they are unable to honor previously agreed upon debt repayments. If Greece does, in fact, default on loan payments, they will likely be forced out of the European Union, and this is the reason so many people are paying such close attention to the ongoing debt talks. As we move into next week, I imagine that we will continue to see much of the same from Greece and that the global marketplace will pay just a bit more attention to the situation.
FOMC Meeting Eyed
Though this week was mostly devoid of economic happenings, the same cannot be said for next week. Already, investors are speculating about what they think the outcome of next week’s FOMC meeting will be. As is typically the case, I am of the opinion that the Fed will, in all likelihood, remain as vague as ever regarding interest rate hikes.
With that being said, however, many members of the Fed have been making speeches, alluding that interest rates should be hiked sometime in the near future. Just this week, a member of the Boston Federal Reserve came out as saying that he thinks rate hikes will happen soon so long as the US Dollar continue to improve alongside global economic growth. Of course, more factors than those will play into the decision to hike interest rates.
For precious metals, the prospect of raised interest rates in the United States is one that does not help spot values at all. This is so because higher interest rates will mean that investors will be more interested in interest-bearing assets as opposed to safe-haven assets like gold and silver. As the next few weeks and months play out, it will be truly interesting to see what developments take place along the raised interest rates front.