January 22nd Midweek Gold Market Update

Gold and silver are trading near even on Wednesday, just one day after posting considerable losses. The overall trading atmosphere thus far this week has been quiet mostly thanks to a lack of economic data from around the globe. The lack of fresh inputs is allowing precious metals bears to retain control even though equities and the US Dollar are not doing as well as they were a week ago.

Next Tuesday’s Federal Reserve meeting is at the top of everyone’s agenda and will continue to be so long as more tapering is a possibility.

Europe Seems to Be Doing Everything the Right Way

If you think recent economic data out of the United States has been strong then you must not be hearing any of the data coming from the EU. As of late, every single piece of economic data in Europe is astoundingly positive and is translating into a stronger investor outlook on the region as well as more interest in European equities. In fact, a report released today indicated that demand for 10-year bonds in Spain is at its highest point in years. Also, demand for bonds in Portugal and Ireland were recently reported as being on the rise.

If you can recall a few years back, the Irish and Portuguese economies were on the verge of collapse. Now, however, these same economies are showing consistent signs of growth and are just two of many EU economies crawling their way back from the worldwide recession of 2008. So long as the strong economic performance continues in the European Union there is little doubt that 2014 will be a great year for a region that really needs one.

BOJ’s Latest Move, or Lack Thereof

The Bank of Japan ended their most recent meeting early on Wednesday with no major policy changes to speak of. Currently the BOJ is employing easy money policies in an effort to increase annual price inflation to 2% within 2 years. Japan and the rest of Asia have been fighting off deflation at every turn for the past year or more.

Just the other day the central bank of China injected more cash into its economy in an effort to fight continually rising short-term interest rates. The new injection of cash is also being used as a way to satisfy Chinese citizens’ need for money ahead of the Lunar New Year that is being celebrated towards the end of the month. The Lunar New Year is often celebrated with gift-giving and one of the preferred gifts is gold bullion. The Lunar New Year being a little more than a week away means that demand for precious metals is high at the moment.

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