As the US markets opened on Wednesday, gold and silver were trading down a bit but were more or less at even. This comes one day after gold and silver declined in value a bit after a late day surge by both the US Dollar and US stocks. Though gold and silver are not making many gains lately, they are fighting against heavy downward pressure with more success than anyone had anticipated. Today we hear about treasury Bonds which are trading higher than they have in a while in the hours before a $35 Billion 5 year note bond auction.
After Ben Bernanke addressed Congress last week about the future of monetary policy in the US, investors and market watchers have taken on an increased interest in any and all news coming from the United States. Yesterday saw a slew of strong economic reports, including a 5 year high in consumer confidence. These reports did a good job of furthering the belief that Quantitative Easing will and should be wound down at some point this summer.
Another piece of news that will increase the confidence of those convinced that QE should be brought to an end is the fact that 10 year T note yields are up by over 2 percent. This just goes to show that the marketplace is gaining confidence in the US market. As of late nearly every bit of economic news, including US Dollar and stock values, have been pointing towards the fact that the American economy is actually doing a lot better than it was only a year ago.
European, Asian News
The one key economic story to pay attention to in Europe on Wednesday was that of an employment report out of Germany, though it proved to be much more disappointing than anyone had expected. This news immediately pushed European stocks down. Additionally, an OECD report indicated that the European-wide economy will contract even more in 2013 than it did last year.
Asian stocks rebounded on Wednesday after posting stagnant results on Tuesday. The stronger Asian stock index was likely due to a stronger stock market in the US on Tuesday. Lately, Asian and US stocks have been moving in similar fashion while the two nations’ currencies are becoming more clearly inversely related. The reason the two currencies are behaving in opposite fashion can be directly attributed to the fact that Japan is currently employing some of the most aggressive monetary policy in the world. So far it has been paying off for the small island nation, though many experts are skeptical of its ability to produce such good results in the long run.
Rounding Out the Week
As we bring the first part of the week to a close we now focus on the things we have to pay attention to from Wednesday and moving forward. Two economic reports, including the mortgage applications survey and retail sales report, will be announced on Wednesday. Though investors will be paying close attention to all economic news out of the US, these reports, barring shocking, unexpected news, will likely not have too much of an impact on precious metals one way or another.
As always, investors will be paying close attention to both US stocks and the US Dollar as they close out the week.