August 21st Midweek Gold Market Update

So far this week gold and silver have experienced a mixed bag of results, making gains one day and losses another. Luckily, however, both the gains and losses have more or less offset each other and by midday on Wednesday both metals were sitting in essentially the same position as they were when the week opened up.

Even though we are in the latter stages of August, a time of year where the world trading atmosphere is mostly subdued due to people taking vacations, there have been plenty of news stories to talk about. This week a few stories that we have touched on include the continued violence in Egypt, rapidly depreciating Asian currencies, and the Federal Open Market Committee’s upcoming meeting’s minutes. To give you the short, almost all of these stories have boosted safe-haven demand for both gold and silver.

Depreciating Asian Currencies

Higher interest rates are beginning to once again become a mainstay in many of the world’s most prominent economies. This is a natural economic occurrence, though these rising interest rates are working to put immense selling pressure on many of the world’s mid-level currencies, especially those in Asia. Hardest hit, perhaps, were both the Indian Rupee and the Indonesian Rupiah. Both of these currencies began declining rapidly early last week and have since never looked back. The selling pressure is mounting and even though both Indian and Indonesian governments are working to alleviate the downward pressure, nothing has worked up to this point.

The fear which is plaguing the marketplace is that once these currencies fall even further they will take other mid-level currencies with them. At this point all we can do is sit back and watch this situation unfold, though precious metals investors are hoping things stay on this course as safe-haven demand for gold and silver is beginning to surge.

FOMC Minutes

The US Federal Reserve seems to be in the news almost weekly, and as such, this week is no different. This time around the Fed is in the news due to the upcoming release of the FOMC’s minutes for their September meeting. These minutes will be released and digested later in the day, though the speculation has already begun.

What investors are hoping for is some news in regards to the future of monetary policy, though this news is not a guarantee. While many contradicting thoughts about what Quantitative Easing’s future will be in the United States have been circulating, the Fed has done more to confuse investors than it has to answer or address their many questions and concerns.

The hope is that these minutes will be different than the usual, though in my personal opinion I would not expect to hear any earth-shattering news upon the release of the minutes. This, however, is just my opinion as I have been wrong more than once in my life.

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