Gold and silver are just about to wrap up what has been a week they would like to quickly forget. For the most part, the last four trading days have been somewhat quiet due to a lack of economic data and a number of investors holding their positions ahead of next week’s European Central Bank meeting.
When this week got underway on Tuesday, precious metals were doing more or less the same thing they have been doing for the past few weeks, trading sideways. While it was more than obvious to many traders that precious metals were on the verge of breaking out of that range, no one could decide which direction spot values would head. Well, we now have our answer as both gold and silver are posited to record their worst trading weeks in multiple months’ time. As it stands, gold is sitting somewhere in the neighborhood of $1,240/ounce while silver has finally fallen below $19/ounce. While it would be nice to believe that metals will bounce back next week, it’s already looking like such will not be the case.
ECB Meeting Primary Concern For Investors Next Week
As far as economic data is concerned, this week did not deal the marketplace a large dose. What little US economic data made its way to the market was mostly positive and just ended up piling more pressure on the precious metals market.
The crisis in Ukraine is slowly but surely fading into the background of the marketplace’s concern as violence and tensions throughout the country are continuing to decline. Safe-haven demand for precious metals has been helped by the crisis in Ukraine over the past few months, and without that factor in the market, it will be that much more difficult for gold and silver to fight off all the downward pressures being levied against them.
As the market bears retain their firm grip on the marketplace, investors are continuing to grow worried about the prospects of metals over the course of the next few weeks. Next week will be of particular importance to investors as it is widely believed that the European Central Bank will be announcing some sort of new monetary stimulus policy at the conclusion of their monthly meeting, expected to be held early next week. Normally, monetary stimulus would be good news for precious metals investors, but this time things are a bit different. The reason for this is that monetary stimulus in Europe will almost assuredly drive down the value of the euro currency which will, in turn, give the US Dollar plenty of room to make massive gains. If the US Dollar is doing well, and US equity markets continue to perform well, gold and silver spot values will more than likely have nowhere to go but down. At this point, any talk of monetary stimulus in Europe is nothing more than speculation, but with deflationary pressures as strong as they have been lately, many feel as though the ECB has no choice but to implement some sort of new stimulus measures.