January 7th Midweek Gold Market Update

After two consecutive days of impressive gains, both gold and silver are conceding value to start of the day on Wednesday. So far this week, the market has been dealt a good bit of economic data, most of which is not having too big of an impact on the marketplace. What is catching the attention of investors, however, has been an equity market decline that has stoked fears that perhaps the global economy is not as strong as originally believed.

As the duration of this week plays out, investors will continue to deal with the boatload of economic data that is expected to be made public. In addition to this, the market will also continue to pay close attention to the status of global equity markets as most of them have taken a beating through the first few days of the week.

Equities Dive On Global Growth Concerns

Through the first few days of this week, the market has seen equities from around the world take a noticeable downward dive. Thanks to the value of crude oil dipping below $50/barrel and holding that position, energy stocks the world over were being sold off at a rapid pace. While declining crude oil prices are taking their toll on energy stocks, they are also bolstering fears regarding possible price deflation.

In addition to all of this, the market is still very much concerned with what is happening across the European Union. Just yesterday, the Markit PMI for the EU in December was released, and though December’s reading was better than November’s, the data, on the whole, was deemed poor. This only adds to a recent string of poor economic data as it is still very clear that the EU is in a lot of trouble both financially and economically. Looking ahead, a European Central Bank meeting expected to be held within the next two weeks is beginning to cause a lot of speculation.

Possible Monetary Policy Change by ECB

Investors are already preoccupied with the forthcoming ECB meeting simply because it is now widely expected that the EU’s central bank will announce the institution of a government bond-buying monetary stimulus package.

Just the possibility of this happening has been enough to sink the Euro currency to new lows against the greenback. As you are probably well aware at this point, the more the monetary policies of the EU and the US diverge, the more likely it is that the greenback will make gains against the Euro currency. Typically, a stronger Dollar is something that does gold and silver no favors, but this week that has not really been the case up until today.

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