Despite having a rough first half of the week, precious metals were able to bounce back to some extent on hump day. The last two days have seen investors focus on a semi-annual financial testimonial given by the chairperson of the Fed and directed to Congress, so that has consumed a bulk of the marketplace’s attention.
In addition to that, investors also have to contend with the fact that Asian markets are, have been, and will continue to be more or less lifeless due to the celebration of the Lunar New Year. Though the market is still very much concerned with what is happening across Europe from a financial and economic standpoint, most of those issues have faded to the back-burner as the week has worn on. Greece seems to have struck a temporary deal with their numerous creditors, so I imagine it will not be for another 4 or so months until we have to really focus on the peril Greece’s economy is inevitably going to face.
Yellen’s Remarks More Middle-of-the-Road Than Anything Else
Like was stated in the opening, Janet Yellen, Federal Reserve chairperson, has spent the last two days addressing Congress with regard to the overall status and direction of the US economy and financial system. Positively, Yellen commented that the US economy is continuing to lead the world’s economic growth and should continue to do exactly that throughout the rest of this year.
Still, however, she and the rest of the Fed remains reluctant to quickly raise interest rates, despite the fact that they have been at near-0 levels for a few years now. She maintained that the prospect of raising interest rates in the US is something that will need to be discussed and determined on a meeting-to-meeting basis. Basically, she offered investors little to no new information on interest rate hikes and because of that, precious metals were given some support.
At the end of the day, I do not think interest rate hikes are going to happen anytime within 2015 and there are plenty of indicators to back that belief up (instability across Europe/Asia, unpredictable crude oil prices, currency wars, etc.). Still, you can bet that investors will be hanging on every piece of economic data coming from the United States as the US is currently the world’s top-performing economy. Until that changes, investors will look at what the US is doing before they analyze any other global economy.