Gold and silver spot values traded sideways today, but have done particularly well this week. A plethora of news stories turned this 5-day session into one that was far more exciting than originally anticipated. With worries surrounding the financial system in Europe, violence in the Middle East, and the potential for raised interest in the United States, this week went from boring to eventful quickly.
Violence In Gaza Supports Safe-Haven Demand For Metals
One of the biggest events this week was the advent of an Israeli offensive against the Gaza Strip and Hamas. With air strikes and rocket attacks occurring multiple times every day, Gaza is more readily being transformed into a war zone. What’s more, there is no real way of knowing when the violence will end as both sides of the coin have been lobbing threats and missile fire back and forth all week.
This, along with the civil war in Iraq, is causing safe-haven demand for precious metals to become a factor for investors to consider. With both situations looking like the might drag on for some time to come, investors can expect safe-haven demand to stick around too.
EU Worries Calm, But Still Persist
Yesterday brought with it quite a few pieces of economic data from Europe, most of which was of the unsavory variety. With poor economic reports from France and Italy added on top of a budding Portuguese bank crisis, sell-offs in European equity markets took up a majority of the day Thursday.
Most notable was a report claiming that one of Portugal’s biggest banks may be in some trouble after its parent company missed scheduled debt payments. While the Portuguese PM was quick to reassure the public that their money is in safe hands, investors couldn’t help but think back to the sovereign debt crisis which is still very fresh in the memory banks. Bond yields across Europe shot up as a result of this report, but have since calmed down. As we head into next week, I expect continued attention to be placed on European bond markets as investors and market analysts will want to gain as much insight as possible into where Europe will be headed, from a financial standpoint, over the next few weeks and months.
In all, this week provided the precious metals market with innumerable boosts from a variety of different factors. Next week will more than likely yield much of same due to the fact that economic data is going to be on the lighter side.