Gold and silver, after performing extremely well in the first two days of the week, are suffering a bit of a corrective pullback through the first half of Wednesday. Though there are not many economic news stories for investors to discuss, a budget agreement reached by US Democrats and Republicans is stealing all the headlines in the United States.
Apart from the budget deal, investors are focusing more and more on the upcoming FOMC policy meeting, scheduled to kick off on Tuesday of next week.
Budget Deal Reached, Shutdown Avoided
In an unprecedented, and frankly unexpected move, US lawmakers drafted a bipartisan budget deal that will last for the rest of this fiscal year. While this move was unexpected, it was a positive one due to the fact that the budget deadline was once again fast-approaching. Contrary to popular belief, the budget deal that was reached during the government shutdown in October was only a temporary one. This meant that if lawmakers could not draft another, permanent budget by Christmas we would have to weather yet another government shutdown.
Though this is big news, the precious metals market did not react to it too much. Now that the budget issue is figured out, US lawmakers now have to worry about the fast-approaching debt ceiling deadline.
China to Continue Stimulating Economy
A report out of China showed that Chinese banks significantly increased their lending in November. This report has caused many to believe that China and its monetary officials are still set on stimulating the Chinese economy, despite the risk of widespread, dramatic inflation.
This week has been especially slow as far as economic news is concerned, but that has not stopped investors from speculating with regard to the outcome of next week’s FOMC meeting. While many investors believe that we will hear a tapering announcement as early as next week, others are convinced that tapering will not be enacted until sometime in 2014.