Gold and silver spot values are making gains as of the writing of this post due to some bargain-hunting after recent losses. While progress is being made this morning, there is a strong belief that it won’t extend too far beyond that. After all, the market bears are in control and with the USD and US stocks improving as much as they have in recent weeks, it is going to be difficult for gains to be made, let alone sustained.
This week is shaping up to be generally quiet simply because there is little to no economic data on the slate. With that said, however, this week marks the unofficial end of the summer and thus the beginning of a more normal trading atmosphere. With upcoming central bank meetings encapsulating the attention of the marketplace, it is clear to see that, despite a slow week, investors are going to keep themselves occupied.
Interest Rate Speculation Grips the Market
This week is already shaping up to be just like last week due to the minuscule number of economic reports being made public. As it is the last week of August, most people are preoccupied with last-minute vacations and simply taking some time off before this week–the unofficial end of summer. Still, with last week’s global central bankers meeting fresh in the mind of investors, it is clear to see that they will be preoccupied for a majority of this week.
In case you missed it, last Friday saw the world’s most influential central bankers meet in Jackson Hole, Wyoming for their annual meeting. Investors were paying such close attention to the meeting simply because European Central Bank president Mario Draghi and Federal Reserve chairperson Janet Yellen were scheduled to make speeches. In her prepared remarks, Ms. Yellen reiterated that while the US economy is and has been improving, there is still much more room for growth before interest rates are raised. Regardless of this, her remarks were perceived by the market as being more hawkish than anything else and, as such, the value of the US Dollar shot straight upward.
In stark contrast to Ms. Yellen, ECB president Mario Draghi made it clear that more monetary stimulus may soon be implemented throughout the EU. If this proves to be the case sometime further down the line, most experts believe it will mean a further devalued Euro currency. Even worse for the Euro would be raised US interest rates anytime in the near future as that event would give the Dollar even more of a boost than it has been given already.
It is important to keep in mind, however, that all of this is mere speculation and there is no real way of telling what the Fed or ECB plans on doing until they put a plan into action. Still, the upcoming weeks’ and months’ economic data will be very important and will be hawked over by investors from all over the world.
