August 14th Midweek Gold Market Update

Gold has had a bit of a mixed week thus far, after making solid gains on Monday and then subsequently posting losses on Tuesday. Silver, on the other hand, has made solid gains this whole week. Both metals, during the morning hours of Wednesday have been on yet another solid upswing which has seen gold gain over 10 dollars while silver has thus far gained closer to 30 cents.

It will be interesting to see if both metals can sustain and possibly even build upon these gains as the day plays out, though with the economic data which was released out of the United States, gains seem likely.

US Producer Price Index Report Weaker Than Anticipated

A few things investors were looking out for on Wednesday was the latest producer price index report, coupled with a speech that will be held later today by the president of the St. Louis Federal Reserve bank, a certain Mr. Bullard.

It was reported by the US Labor Department at 11AM on Wednesday that wholesale prices did not change from June to July. This data was a bit disappointing to hear, though it was not expected that major increases were going to be seen as the same wholesale prices rose by nearly 1% from May to June of this year.

The Core PPI, which excludes energy and food prices, rose by only .1% from June to July. This was a smaller gain than the expected .2% increase.

Towards the end of the day on Wednesday, a speech made by James Bullard will catch the attention of investors everywhere. Even though it is not explicitly clear what the president of the St. Louis Federal Reserve bank will discuss in his speech, most people are guessing that his talking points will likely at least touch on Quantitative Easing and its fate going forward.

Yesterday saw Dennis Lockhart, president of the Atlanta Federal Reserve bank, make a statement saying that the inconsistency of recent economic data out of the US is the major reason behind why the Fed is unable to make a decisive decision regarding what to do with Quantitative Easing as we move into 2014. If Bullard doesn’t make any surprising comments today, investors are going to be shifting their attention to next month’s Federal Open Market Committee meeting as a source for more information on the future of QE and whether or not it will be tapered or even ended before we move onto next year.

The weaker than expected data regarding the PPI in the US is the major reason behind why gold and silver have made gains in the early parts of Wednesday.

Europe Waves Goodbye to the Days of Recession

The last week or so of worldwide economic news has been highlighted by a large amount of positive economic readings emerging from the European Union. Contrary to the previous 6 months, where we were subjected to nothing but negative economic readings from Europe, the last week has featured positive pieces of data stemming from all realms of the EU economy.

On Wednesday, it was reported that GDP from the first quarter to the second quarter of 2013 for the EU had risen by about .3%. Unfortunately, GDP for this year’s second quarter was almost a whole percentage point worse than it was only a year ago.

Also happening on Wednesday was a German government 10-year bond auction. This particular auction saw positive yields of about 1.80%; the largest yields in a German bond auction for well over a year. Most of this data has helped grow the confidence of those who are of the school of thought that the European economy is speeding along the road to economic recovery.

This whole week has also been highlighted by an increase in the demand for physical gold and silver as reported by brick and mortar dealers and online dealers of precious metals alike. If the last two days of this week at all resemble the last two days of the previous week, precious metals investors will be more than satisfied with the gains both gold and silver were able to make.

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