Gold and silver bounced around a bit during the week but managed to end up on top when all was said and done. Despite it being the end of August, a time of the year where the trading atmosphere is usually quiet, this week has featured a number of different news stories. The ongoing violence in Egypt continues to catch the attention of the world as protesters and police continue to clash. Violence of this type helps boost demand for gold and silver by making the two metals appeal to investors as safe-haven assets.
In addition to the violence in Egypt our attention was also placed upon the US Federal Reserve and a looming currency crisis set to strike Asia. All in all it was a pretty busy week as far major, worldwide news stories were concerned.
FOMC Minutes Released
The Federal Reserve, over the course of the past month or so, has been in the news quite often. This time around they made the news because investors were anxiously awaiting the release of the minutes for the FOMC’s September meeting. The reason investors got so excited, as is usually the case, was because they were hoping to hear some clarification regarding the future of Quantitative Easing in the United States.
When the minutes broke earlier this week, hopes were shattered as the FOMC released a text that indicated the Fed was more confused about monetary policy than it was sure of any particular move to make. Because no new news indicating that QE would be done away with was mentioned in the minutes, investors saw this as being favorable for gold and silver. Despite that, gold and silver did not make any major gains in the immediate aftermath of the Fed’s minutes.
Asian Currency Worries
Almost a full two weeks ago now, gold and silver began their drastic upswing that has since been continued. Around the same time, there was another ongoing news story that got more or less overlooked due to precious metals’ unprecedented gains. This was the story of the Indian Rupee and the Indonesian Rupiah, both of which were depreciating as fast as gold and silver were making gains. At first, few paid this story too much attention because they were under the impression that the decline was only a temporary one.
When this week began and the two currencies continued to lose value, some concern was raised. Market experts determined that rising interest rates in countries like the United States as well as those in Europe were translating into heavy downward, selling pressure being placed on mid-level currencies. The fear is that these high interest rates would then cause even more currencies to lose their value just as quickly as the Rupee and Rupiah have.
For this reason, we will continue to keep a close eye on currencies throughout Asia and the world to see what, if any movements they will be making.