Week of February 10th Silver Market Update

Precious metals are conceding some value today thanks to a stronger US Dollar and weaker crude oil prices. The last week or more has not been all too kind to precious metals and has seen spot values take some decent hits. This week, from an economic data perspective, has been quiet and devoid of much activity.

US stocks as well as the US Dollar are doing better and this alone is putting pressure on gold and silver. Generally, however, the marketplace is a bit nervy, especially with regard to Greece and its economic and financial problems. Greece has been the focus of investors this week and it is likely that that will not change.

Market’s Attention Turns to Greece

Like was stated, the focus of the marketplace this week has remained on Greece’s new government and their refusal to abide by formerly agreed upon measures to reduce debt. Debt reduction in addition to austerity measures were laid forth by the EU as a prerequisite for additional financing provided by the EU.

Germany is not taking too kindly to Greece’s new government and is holding firm to the belief that Greece should honor previously agreed upon measures. Now, there is a growing belief that Greece may not remain part of the European Union for too much longer, and this is breeding some noticeable risk aversion this week. Unfortunately for precious metals, risk aversion is not outdoing the force of outside forces such as a stronger US Dollar and improving US stocks.

On top of all of this talk regarding Greece, another fear is that Greece’s potential exit from the EU might prompt other, smaller EU countries to do the same. This will add to the growing sense of uncertainty investors feel towards the European Union and its many economies.

Chinese Inflation Falls Dramatically

During the overnight hours, it was reported that Chinese inflation fell to a 5.5 year low during January. The reason for falling inflation in China is due to a weaker demand for and smaller supply of raw commodities such as crude oil.

In other news, China’s consumer price index was reported as up by almost a full percentage point during January. Finally, China also reportedly injected more liquidity into its financial system as part of yet another effort to give their economy a boost.
As this week plays out, I imagine that the market will continue to focus on smaller stories from the EU and other struggling economies.

Posted in Market Updates

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