Gold and silver have begun this week posting minor losses, continuing late last week’s spot value decline. There have been multiple positive economic reports from China this week, something that would typically be bullish for precious metals if it weren’t for the growing risk-on attitude exhibited by investors.
With the Chinese Communist party meeting and the European Central Bank meeting taking place later in the week, investors will likely have some fresh data to sway their investing decisions.
Chinese Upbeat Economic Data Continues
Yesterday the marketplace witnessed yet another piece of positive Chinese economic data. A day ago it was an increase in China’s non-manufacturing PMI which caught investor attention, while today it’s all about an improved services PMI reading for October. All of these positive reports are doing nothing more than reaffirming our belief in the strength of the Chinese economy.
The Chinese Communist party meeting is scheduled to take place this week, another point of interest for investors. The Communist party meeting serves the purpose of allowing Chinese officials to meet and discuss future policies, and subsequently announce them to the nation and the world. Due to rising short-term interest rates and an overheating housing market, some people are holding out hope that the Communist party meeting may yield some sort of change to monetary policy.
ECB Meeting This Week
More sub-par economic data was produced by Europe as it was reported today that annual PPI was down almost a whole point on the year. With low inflation rates abounding in Europe and economic recovering seemingly stalling, investors are beginning to believe that this week’s European Central Bank meeting may yield a change to monetary policy in the region. It is now widely believed that the ECB will ease its monetary policy in an effort to keep the slow economic recovery process afloat.
Something that perfectly illustrates the widely held belief that interest rates will be slashed (monetary policy will be eased) is the fact that the euro currency has dipped quite a bit in comparison to the US Dollar in the past few days. The surge exhibited by the USD is also a huge factor in why gold and silver are stagnating despite boatloads of bullish data from China.
