Precious metals are trending near even to close out what has proven to be a fairly rough week. The lack of any real noteworthy economic activity has caused the US Dollar to trend higher and, as such, has weighed on the value of precious metals. In short, the currently bearish market is forcing spot gold and silver into a bit of downward sloping trough that sees spot values take 1 step forward for every three steps backwards. With underlying support fleeing at every turn, it is incredibly difficult for metals to gain any sort of foothold in the current market atmosphere.
While things from an economic data perspective were quiet for much of this week, the geopolitical front was abuzz with activity. For one, we are now in the 5th day of a ceasefire between Ukrainian and pro-Russian militants. This marks major progress made as it is the first real break in fighting we have seen in the past 5 or more months. With that said, there is no real way to determine whether this week’s ceasefire will have any larger implications as it pertains to a lasting peace in Eastern Ukraine.
In other news, Wednesday evening saw US president Barack Obama address the nation with regard to his intentions on handling the ISIS threat. According to his speech, President Obama made it clear that while no US combat boots will be on the ground in Iraq nor Syria, the United States will join allies in the intensifying of airstrikes against ISIS militants. This news was more or less expected and did not have any major impact on the marketplace. While the world was expecting Obama to announce increased airstrikes, no one was expecting Russian president Vladimir Putin to announce that he would perceive any airstrike by the US in Syria as a direct threat to Russia. As Syria’s close ally, Russia is attempting to politically incapacitate Obama when it comes to striking within Syrian borders. As such, it will be interesting to watch this situation play out over the next few weeks.
Investors Already Looking Ahead to Next Week
As a result of this week’s quiet nature, investors are already looking ahead to next week and the boatload of economic activity that is expected to take place. Chief among investors’ concerns is the upcoming Federal Open Market Committee (FOMC) meeting being held in the United States. There is talk of raised interest rates in the US, and the market will be wanting to find out any information about this interest rate hike. Just this week, in fact, a survey from the San Francisco Federal Reserve indicated that investors might seriously be underestimating how quickly the Fed can raise interest rates.
In other news, next week is also playing host to a referendum meant to determine the fate of Scotland. The referendum is simple; it will ask whether the voter wishes Scotland to remain part of the United Kingdom or become an independent nation (ie Ireland). The result of the referendum will have major implications for Scotland, the UK, and the British Pound, so it makes sense that investors will be paying incredibly close attention in both the lead-up and aftermath of the referendum.