Gold and silver did some bouncing around during the week, but both metals managed to make it a positive 5-day session. Even though the end of August is supposed to be a quiet time of the year as far as trading is concerned, this week was particularly packed with news stories from around the world. While we continue to keep our attention locked on the ongoing violence in Egypt, some other stories out of Asia and the United States poked their heads into the spotlight during the week.
Though gains made this week were not anywhere near as substantial as the gains both gold and silver made last week, it was still a good week nonetheless. If nothing else, this past week has shown investors that gold and silver can sustain positive runs and are not solely limited to the isolated, one-day gains we have seen more often than anything else over the past half year or so.
Worries About Asian Currencies
Almost two weeks ago now, gold and silver embarked on an upswing that would see both metals make the large gains. At the same time as precious metals’ upswing, some Asian currencies began to depreciate quite rapidly. The two most notable currencies that took a dive were the Indian Rupee and the Indonesian Rupiah. Both currencies were falling almost in conjunction with the rise of the spot values of gold and silver. When the decline in value experienced by the Rupee and Rupiah first got underway, the story was overshadowed by the surging spot values of gold and silver, but at the beginning of this week, with the depreciation continuing, investors began to pay attention.
It was quickly figured out that the reason behind these currency declines was an incidence of higher interest rates in countries across Europe and North America. Higher interest rates have translated into heavy downward pressure being placed on both Indian and Indonesian currencies. The fear, however, is that the depreciation we have witnessed over the past two weeks will not be experienced by only the Rupiah and the Rupee, but by many mid-level currencies across the globe.
If this type of currency crisis breaks out around the world, the whole marketplace will be thrown into a havoc. The good news, at least for precious metals investors, is that stories like this do a great job of promoting gold and silver as being safe-haven assets. We will continue to monitor this situation and provide all the latest details when they emerge.
FOMC Minutes Hit the Press
The Federal Reserve of the United States seems to get their name in the news every single week, and this week is no different. This time around investors anxiously awaited the release of the Open Market Committee’s minutes from their upcoming September meeting. The overriding hope was that some light would be shed on what the future of monetary policy in the US will be, though investors were let down in that regard.
Instead, the minutes which were released exemplified a Fed who seems as though they have no actual idea what should happen to QE by the time 2013 comes to a close. Some think that the monetary policy should be wound down, others think it should be abandoned completely, and still others think that it should not be touched at all.
Hopefully the actual meeting, which takes place in a few weeks, will see a Fed that is in sync as opposed to the Fed we have witnessed lately.