Precious metals spot values are conceding some of the gains made yesterday in what is looking like profit-taking after a day of robust gains. Though gold was over the $1,200/oz mark and silver was approaching $17, that has all changed today. Still, precious metals are in a better position now than they were by the end of last week. Thanks to OPEC’s inaction at a meeting last Thursday, crude oil prices collapsed over the weekend and brought all raw commodities down with it. Crude oil has since recovered somewhat, but is continuing to hover near multi-year lows.
The big event of the week is without a doubt Thursday’s European Central Bank meeting scheduled to be held in Frankfurt. In addition to this, there are a few pieces of economic data that will undoubtedly catch the attention of the wider marketplace. At this point it is entirely unclear what kind of week gold and silver will have, but we do know that we are in for an exciting next 3.5 days of trading.
Dollar Backs Down on Monday, Recovers on Tuesday
Surprisingly, the US Dollar opened up the week in pretty poor fashion. The greenback was conceding value straight from the opening bell on Monday and finished the day well into the red. One hypothesis put forth by a few market experts is that the market became too obsessed with the Dollar too quickly, and that profit-taking from the Dollar’s extended upward trend was threatening to cause massive shift downward.
The value of the greenback is recovering today, but one still is left to wonder just what made the greenback move so noticeably downward on Monday. One thing that is for certain is that you can expect the market to continue paying attention to the currency markets both in the US and elsewhere around the world.
Attention Turns to European Central Bank Meeting
While the US Dollar and all related price action will be of the utmost importance to investors this week, more attention will be paid to the next European Central Bank meeting and its possible outcomes. With ECB president Mario Draghi in and out of the headlines talking about the possible implementation of quantitative easing measures, the marketplace is expecting some sort of shift in policy to come as a result of Thursday’s meeting.
Just last week, the OECD came out and commented that European economic growth is on the verge of having a severely negative impact on overall economic growth. If the EU continues to struggle from an economic standpoint, this may end up further delaying when the US Federal Reserve decides to hike interest rates. Hopefully, with some help from the ECB, the EU and its many economies can emerge from this period of economic stagnation sometime in the near future. With QE measures being attributed to the United States’ emergence from a recession, the thought it that similar QE measures will do the same for the EU. Whether this proves to be the case or not, however, is something we will just have to wait to find out.
