Precious metals have spent a lot of time on the decline this week, but through the last few days were able to stabilize just a bit. Thanks to worries surrounding Greece’s ability, or lack thereof, to pay off debts, gold and silver are responding positively to increased safe-haven demand. There wasn’t all that much in the way of economic data this week, thanks to it being a shortened week due to the Memorial Day holiday being celebrated on Monday.
As we look ahead to the coming days and weeks, attention is once again being placed on the subject of interest rate hikes in the United States. Despite only a few weeks ago it being more or less confirmed that interest rates would not be risen this year, belief is starting to grow that that is exactly what is set to happen sometime in the near future.
Interest Rate Hike Discussion Picks Back Up
For a majority of the early parts of 2015, economic data from the United States has been lacking to say the least. It seems as though every week I am writing about one or more reports that quite simply missed the mark, and on many occasions drastically so. Thanks to the slow but sure degradation of US economic data, the outlook on the part of investors regarding interest rate hikes slowly but surely took a dive. As of a few weeks ago, you would have been hard-pressed to find an investor who was banking on interest rates being hiked this summer. Now, the number of people who abide by this belief is growing.
Just last week, Janet Yellen spoke and insinuated that interest rate hikes very well might be right around the corner. Add that to the fact that immediately recent economic data from the US has been upbeat, and investors are already changing their opinions regarding rate hikes.
This renewed belief on the part of investors has not done gold and silver any favors. As investors scurry to get their hands on interest-bearing assets, safe-haven gold and silver is left playing second fiddle. Of course, with that being said, it is important that we do not forget just how crucial all the instability across Europe has been for metals as of late.
Greek Debt talks Remain In Focus
Also more or less a constant in recent weeks is the discussion regarding Greece’s inability to pay back loans. Despite being at the negotiating table for the better part of the past month or more, officials from Greece and the IMF/EU cannot seem to see eye to eye.
A few weeks ago, Greece’s prime minister made it clear that if a deal is not reached by the end of May, Greece may very well be leaving the EU. Now that the end of May is approaching quickly, that deadline is becoming realer. Just yesterday, it was officially announced that unless a deal is reached Greece would assuredly not be able to make its next loan repayment in full. If this situation does unfold we may very well currently be witnessing some of the last days of Greece as a member of the European Union.
Some rumors were circulating today claiming that Greece and its debtors are bound to reach an agreement by Sunday, but this sounds more like wishful thinking that anything else. With that said, it will be very interesting to see what the headlines are by the time markets open up on Monday morning.