January 21st Midweek Gold Market Update

Gold and silver are making gains and are adding to their recent upward trend on a quiet day on the global trading bloc. While today is seeing investors mostly hold their positions while they wait for tomorrow’s European Central Bank meeting, there is still plenty of points of discussion to keep investors occupied.

As you may or may not be aware, tomorrow will see the European Central Bank meet for their monthly policy meeting. Though most every ECB meeting sees investors become convinced that there is a policy shift in the works, this time around it seems as though a policy shift is inevitable. As a result of this, investors the world over are mostly holding their positions and waiting to see what Mario Draghi and his colleagues have to say after tomorrow’s meeting.

ECB Expected to Make Major Policy Shift

This week has seen metals make decent gains, but the reality of the matter is that last week played host to a lot more activity. First, the market was dealt with a surprise move by the Swiss National Bank to unpeg the Franc from the Euro. Originally, the Franc was pegged to the Euro currency in an attempt to keep it from appreciating rapidly back in 2011. Now, with the Euro having been on the decline for the better part of the last few months, no one can really blame the SNB for making the decisions to uncouple their currency from the Euro.

Because of the SNB’s decision to unpeg the Franc from the Euro, the wider global marketplace was dealt a bit of a shock. As a result, we saw safe-haven demand for metals shoot up almost immediately.

Shortly thereafter, the Euro was dealt another blow while metals were given even more momentum. This time it was a ruling by the European Court of Justice that really helped precious metals. According to the ECJ, the ECB is able to commit to experimental monetary policies so long as they are explained and fully understood by the public before being enacted. This ruling more or less solidified the fact that the ECB was going to be introducing a bond-buying program, and had investors the world over convinced that the announcement was going to be made this week.

Now, as we are only one day away from the European Central Bank meeting, most investors are holding their positions, waiting to see if the ECB is actually going to make an announcement at their meeting tomorrow.

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