July 17th Midweek Gold Market Update

Gold and silver started  the middle day of the week making some decent gains. These gains can be attributed to Ben Bernanke’s prepared text for his speech to the US House of Representatives being released in the early morning hours of Wednesday. While the actual speech is set to take place later today, the prepared text shed a lot of light on what, specifically, will be talked about.

The US Dollar Index was also a bit lower in the early morning hours on Wednesday and that is always good for gold and silver. While the prepared text of Bernanke’s speech is already out, his Q&A session after his speech might yield some further insight in regards to the economy and monetary policies.

Bernanke’s Prepared Text Released

Though Mr. Bernanke still has to actually speak, the content of what he plans on saying has already been released. The prepared text indicated that the Fed plans on remaining flexible in regard to its monetary policy. While many people are expecting monthly bond-buying (Quantitative Easing) to be wound down sometime in the near future, Bernanke’s  text stated that there is no set timetable for when that is going to happen.

The future of monetary policy, according to Bernanke, will be almost wholly dependent on how the US economy fares over the course of the next few months. Investors digested this news as being beneficial for precious metals though a strong contingent still holds firm to the belief that QE is on its way out.

In fact, the belief that QE is going to be wound down soon took a bit of a hit in the prepared text because Bernanke alluded to the fact that if economic conditions reverse and take a downhill turn, QE could be revamped. If more monthly bond-buying ensues it will almost certainly be beneficial for gold and silver.

Other World News

Since markets all over the world have been awaiting this Ben Bernanke press conference of sorts just as eagerly as Americans, their marketplaces reacted to the prepared text as well. European stocks were down in the wake of Bernanke’s text due to the fact that his words seem adversarial to the outlook on equities.

Asian trading was mostly subdued as the prepared text and speech by Bernanke are happening after most markets in that part of the world are closed. Expect some reaction from Asian markets when their Thursday trading session gets underway.

Protests are still prevalent in Egypt, even after the interim government was sworn in a day ago. Pro-Morsi supporters are still taking to the streets in protest to what they are calling an illegal forced removal of the former President. While no large-scale violence has broken out up to this point, such is always the case in situations like this and for that reason we will be keeping our eyes and ears open.

 

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