Precious metals spot values are moving slightly lower as of the writing of this post and are looking like they will end the week posting minor losses again. To be fair, metals didn’t stand much of a chance during this 5-day trading session simply because the attention of the marketplace remains fixated upon the progress of US equities as well as the US Dollar. There was some US economic data released this week, but the impact it had on the marketplace can best be described as momentary.
What did help gold and silver this week was news of the United States sanctioning and beginning the use of air power against ISIS rebels in Syria. Beginning late Monday evening, reports streamed in claiming that a combination of US planes, bombers, drones, and cruise missiles were bombarding ISIS strongholds through Eastern and Central Syria. Though it was not necessarily unexpected that the US would strike in Syria, it was relatively unexpected that strikes would begin so soon. The news gave gold and silver a bit of a safe-haven demand boost, but any gains that were made on Tuesday were quickly lost by the end of the week. it will be interesting to see what kind of impact the United States’ involvement in the Middle East will have going forward.
US Dollar Continues to Move Forward
The talk of the marketplace the last few weeks has been with regard to when the US Dollar will halt its upward trend. The early parts of this week had some people thinking that the Dollar had run out of gas, but after hitting a 14-month high on Thursday, it is clear to see that momentum is still very much on the greenback’s side. The Dollar was fueled on Thursday by a report from the US which indicated new home sales hit record highs during August. This piece of data came on the back of an earlier week report which indicated existing home sales were suffering. Though the data was mixed, the market perceived the latter good news as outweighing the early week’s sub-par economic report.
As we look ahead, it is likely that the US Dollar will only continue to gain momentum and gain ground against the Euro. You see, the Fed is increasingly tightening monetary policy while the European Central Bank is taking steps to make their’s as accomodative as possible. So long as these divergent policies continue, so too will the inverse relationship of the Dollar and the Euro. It is important to keep in mind, however, that the Dollar is making gains against more than just the Euro. As such, it is hard to envision a scenario where the next few weeks and months provide precious metals with a market atmosphere that would lend itself to gains being made.