Gold and silver spot values are trading steady but are still definitely feeling pressure as of midday on Friday. All in all, this 5-day trading session proved adversarial to precious metals. A quieter market atmosphere–one devoid of many markets-moving data points–did not help precious metals at all, but it is the currently bearish marketplace that is weighing on spot values more than anything else. Next week is expected to bring about a good amount of economic talking points, but the preconceived notion held by many investors is that these talking points will, in all likelihood, be bearish for gold and silver.
On the geopolitical front, this week was also fairly quiet. A ceasefire agreement between pro-Russian and Ukrainian troops is now in its 5th consecutive day and appears to be holding strong. Whether or not this ceasefire leads to productive peace talks, however, is where the real test lies. After all, the powder keg that is Eastern Ukraine can blow its top at any point in time. Unfortunately for precious metals, the less attention being paid to violence around the world is yet another factor working against spot values.
In other news from the geopolitical front, US president Barack Obama recently announced that the United States will be upping the use of airstrikes against ISIS militants in Iraq and Syria. This news was not really unexpected and didn’t have all that much of an impact on spot values. What was eye-rising, however, was the fact that Vladimir Putin, Russian president, remarked, saying that any strike in Syria would be considered a strike on Russia itself. Though the market didn’t really react to Putin’s statement, it will be interesting to see what the next few weeks hold for the Middle East, the US, and Russia.
Light Week Sees Investors Looking Ahead
Admittedly, this week was not the busiest we have seen recently. With that said, next week is already shaping up to bring with it a flurry of economic and geopolitical activity. Apart from the continued focus on currency markets, the investing world will also be taking a close look at what the Federal Open Market Committee (FOMC) of the United States has to say in the wake of their upcoming policy meeting.
As you are probably well aware, the focus of investors from around the world has been and continued to be when and by how much the Fed plans on raising interest rates. While last week’s poor employment report from the US led many to believe that higher rates are further off than many people had anticipated, a survey from the San Francisco Federal Reserve this week made it clear that a large portion of investors are underestimating just how quickly interest rates in the United States can be jacked up. For this reason and many more, investors will be paying incredibly close attention to anything and everything Janet Yellen and the rest of the Fed has to say about the future of interest rates in the United States.
Next week will also see the attention of the market diverted to a referendum vote to determine the future of Scotland. The referendum will determine whether Scotland becomes independent (ie Ireland) or if they will remain part of the United Kingdom as they have for the past few centuries. As of now, the polls are split, but the outcome of the vote will undoubtedly have a major impact on the UK and European economies.