February 4th Midweek Gold Market Update

Precious metals, after posting losses earlier this morning, were able to bounce back and finish the day having posted gains. Some surprising news from China helped boost spot values, but in reality, metals’ gains were more or less negligible. All in all, this week has been quiet from an economic data standpoint which is part of the reason why metals have not moved too far in any one direction.

Yesterday, the big news was that the Australian Central Bank decided to reduce its main interest rates in an effort to stimulate the nation’s failing economy. In the immediate aftermath of the ACB’s decision, the AUD fell against the US Dollar to a 5.5 year low and is still hovering around that position. As time moves on, it will be interesting to see if Australia’s economy fares any better.

China Reduces Reserve Requirement Ratio

Adding to the long list of central banks making policy changes was China’s when it announced early this morning that it would be reducing the reserve requirement ratio for domestic banks. This move was made in an effort to stimulate the Chinese economy. This is important because after a horrid 2014, China is looking to get this year started off on the right foot.

For precious metals, this news was welcomed with open arms due to the fact that China is the world’s largest importer of raw commodities. This news is also helping contribute to the rally currently happening on the part of crude oil.

In other news, the market is slowly but surely turning its attention to Friday’s release of the latest US employment data from January. As it stands, the market is expecting to see non-farm jobs grow by 235,000. If this figure is reached or eclipsed, gold and silver very well might suffer, but if the opposite is true I am anticipating a solid day on the market for metals. Though this week has been quiet, there is still time for things to heat up. The last few days of the week have plenty to bring and I am sure that we are in for at least a surprise or two.

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