April 25th Weekly Silver Market Update

Precious metals posted small losses on both Thursday and Friday, but gold and silver did so well during the early parts of the week that they are still going to post 5-day gains for the first time in nearly a month. As eventful as this week was, it really lacked as far as economic data was concerned. Instead, there was a whole bunch of commentary delivered by high-ranking officials the world over.

Though we are going to conclude the week with nothing more than marginal gains for gold and silver, the fact of the matter is that any upward movement was going to be welcomed with open arms. The last month or so has seen spot values beaten downward so investors were willing to take any bit of reprieve they could get their hands on.

ECB Meeting Sees Rates Kept Steady

Though there was not so much on the slate as far as economic data was concerned this week, but investors were very interested in the European Central Bank meeting that took place on Thursday. Like the United States’ FOMC meeting, the monthly policy meeting for Europe’s central bank always catches global attention.

This time, as expected, no changes were made to the EU’s current monetary policies. For those who are unaware, Europe has been pursuing quantitative easing measures since shortly before the turn of 2016. These measures, which see the ECB purchase millions and billions’ worth of bonds and other assets every month, are aimed at both devaluing the Euro as well as spurring spending and lending. At its core, QE is supposed to give economic activity a bit of a jolt. This worked for the United States and helped the country emerge from the 2008 recession, but some have their doubts with regard to how effective it will be in Europe. So far, we have seen very little, if any, economic recovery tied directly to the QE measures.

Though the ECB’s inaction was mostly expected, Mario Draghi made some comments in the meeting’s wake that worked to drive the Euro lower. In short, Draghi commented that even though interest rates are quite low at the present moment, he and his colleagues made it very clear that pushing rates even lower is not out of the question. He went on to say that interest rates and QE, though very much related, are not directly correlated. This means that if interest rates are lowered, QE is not necessarily going to be expanded, and vice versa. With all this being said, however, Draghi did say that he does still plan on expanding QE in the very near future.

All in all, the ECB meeting and the comments made in its wake worked to push the Euro lower. This also helped the US Dollar make gains to finish out the week, and this is something that has prevented gold and silver from moving upward to finish out the week. Even though Thursday and Friday saw metals lose value, the fact of the matter is that midweek gains were enough to result in a 5-day trading session where gains were made. More important is the fact that this was the first 5-day session in about a month where gains were realized.

Silver was especially impressive this week and ended things above the $17/ounce mark. This is psychologically uplifting for investors and will bode well for the early parts of next week. Now it will be interesting to see what happens next week, when a boatload of economic data is expected to be dealt. In addition to that, it will be intriguing to see what the FOMC has to say at their April meeting. No policy changes are anticipated at the present moment in time, but the Fed loves to surprise the marketplace, so nothing is a guarantee.