Gold and silver are continuing along their recent downward trend as commodities are just about the last thing investors are interested in as of late. By nearly midday on Wednesday gold is down almost 30 dollars while silver’s losses on the day are approaching three quarters of a dollar. Between the US dollar gaining value in comparison to other major world currencies and the Japanese stock market posting impressive numbers that have not been seen in over half of a decade, there is no room for commodities to gain a solid foothold.
Japanese Monetary Easing Destroying Precious Metals
The Japanese stock market has been hitting on all cylinders lately and it is unclear as to when or whether it will slow its progress down. Due to recent monetary easing measures set forth by the Central Bank of Japan, the Yen currency is down and stock markets are doing better than ever.
With investors seeing the Japanese market as a place of much less risk than it was only a short while ago, their interest is focused there as opposed to safe-haven assets such as precious metals. Large-scale investments in gold and silver are typically reserved for times of economic uncertainty and while that was the case a few months ago, Japanese stocks are becoming much more reliable as the Nikkei index continues to rise. Going hand in hand with this is the fact that the Japanese Yen is hitting historic lows when compared to the USD which is gaining value at increasing rates.
On Tuesday there was good news to report out of Europe as industrial production in the region was up by about a whole percentage point this past March. That is the biggest improvement in industrial output in almost two years. While that good news was well-received by Europeans of all walks of life, Wednesday brought with it the disappointing news we are used to hearing about from the eurozone.
Not only did the euro currency lose value in comparison to the USD, but first quarter 2013 GDP posted negative growth. The negative .2% GDP growth in Europe for the first quarter of 2013 helped many people realize that Europe has a long way to go until they are finished with their economic troubles. These most recent news stories have prompted investors and market experts to think that the European Central Bank will push forward with their easy monetary policy that they introduced earlier this year.
The Bank of England announced on Wednesday that their economy is slowly but surely recovering, but this recovery process will take some time. This was their way of saying that currency stimulus will continue throughout the UK for the foreseeable future.
Rounding Out the Week
While there is still room for gold to improve its position, this is seeming more and more unlikely as the minutes and hours tick forward.
There are a few economic reports set to be released in the US during the latter part of Wednesday but it is unlikely that they will have too big of an impact on precious metals, or any commodities for that matter. Gold and silver are fighting the US dollar as of late and until the green currency halts its march forward it is unlikely that gold will be able to turn things around.