July 16th Midweek Gold Market Update

Gold and silver spot values are regaining some of the value they lost through Monday and Tuesday’s trading sessions, but are still a far cry from where they were a week ago. Janet Yellen is scheduled to make the second of two addresses to Congress today, though what she has to say will more than likely be none too different than what she had to say on Tuesday.

Generally speaking, there is a lack of any real markets-moving economic data on the slate this week, and that is not doing the precious metals market any favors. Platinum and palladium. after their 3-week long upward trend, are also trending lower this week, in line with gold and silver spot values.

Day 2 of Janet Yellen’s Address

Coming into this week, investors and market analysts alike were gearing up to hear some potentially groundbreaking news with regard to interest rates in the United States. With Janet Yellen, chairperson of the Federal Reserve, scheduled to make her semi-annual addresses to Congress yesterday and today, most thought that there was no way they weren’t going to hear some news with regard to if/when interest rates in the US would be risen.

Shortly after midday yesterday, that is exactly what investors received as they picked apart everything Ms. Yellen had to say to Congress. Not surprising at all was the fact that she once again reiterated the FOMC’s intentions of having Quantitative Easing completely done away with by this upcoming October. This news was taken in stride by the market due to the fact that it is already more or less common knowledge. Ms. Yellen went on to say that interest rates will remain low for the foreseeable future. In addition to that, however, it was made clear that so long as the US employment sector continues to improve, interest rates may be risen sooner rather than later.

These statements were perceived as being mildly hawkish by the whole of the investing world and, in turn, had a somewhat negative affect on the precious metals market. Despite Yellen saying nothing definite about the future of US interest rates, her statements made it seem as though perhaps interest rates will be risen sooner than the market had originally anticipated.

Upbeat Chinese Data Aids Metals

Lightening the downward pressure being place on precious metals was some upbeat economic data stemming from China. Before US markets opened this morning, it was reported that China’s second-quarter GDP grew by 7.5% on an annualized basis. This news was seen as upbeat because most were not expecting to see year on year GDP growth exceed 7.4%.

This news prompted Asian equity markets to post some solid gains and even acted as an underlying bullish factor for the raw commodities market, which includes precious metals.

With so many geopolitical concerns making rounds, it is truly surprising that the market isn’t paying any closer attention. Foremost amongst these geopolitical happenings is the ongoing violence between Israel and Hamas in the Gaza Strip. As both sides trade rocket fire, with Israel’s being the only ones hitting their targets consistently, the civilian death toll is rising and the situation in general is deteriorating. We will keep an eye on any new developments from Gaza as they will assuredly have some sort of impact on the precious metals market. For now, however, risk-appetite is keeping the precious metals bears in complete control of the market.

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