Gold and silver have been under performing over the first half of the week due to stronger economic news and some remarks made by members of the Federal Reserve. At this point it is clearly evident that many investors and their families are on summer vacation and have taken their minds off of the daily bustle that is the world marketplace.

Even though gold and silver have been declining in value for the majority of the beginning of this week, the US Dollar Index is not to blame. In fact, the USD Index is mirroring gold and silver and while the yellow metal is sitting around a 3-week low, the greenback is hovering around a 5-week low. Apart from European economic news, investors and market watchers have few stories to latch on to throughout the duration of the week.

European Economic News

Since the day the year 2013 started, economic news out of Europe has been disappointing to say the least. It seemed as though every time an economic report from the Euro Zone was due out, investors ducked and covered in preparation for the backlash that a weaker European economy would bring.

This week has been a lot different than most others this year due to the fact that we have now seen three consecutive days of positive economic news stories. Monday brought with it the latest Purchasing Manager’s Index (PMI) reading for Europe, and finally the region saw a reading above the 50 threshold. Any reading below 50 suggests economic contraction while a reading above 50 is a solid indication that the economy in question is growing.

Tuesday brought with it a report which indicated that the number of manufactured goods ordered in the Euro Zone from May to June increased by nearly 4%. Finally, Wednesday brought with it news of increased German industrial production from May to June.

Investors have renewed their faith in the European economy, though only time will tell if this renewed faith is justified or not.

Fed Confuses Everyone

Despite the fact that the US Federal Reserve, namely Ben Bernanke two weeks ago and the FOMC only last week, has assured the general public that monetary policy is not on a preset course, Fed members continue to contradict what has recently been stated.

Just a few days ago, Dennis Lockhart, president of the Atlanta Federal Reserve bank, made comments alluding to the fact that monetary policy is, in fact, likely going to be wound down before the end of the 2013 calendar year. This is frustrating not only because Lockhart is making comments that are in direct opposition to those the FOMC made last week, but it is especially frustrating due to the fact that the Fed’s remarks are becoming harder and harder to trust. It seems as though no one at the Federal Reserve has any real idea of what is going on with monetary policy, and for this reason it would be appreciated by the general public if the Fed’s members refrained from making comments that are seemingly unfounded. It is looking more and more like the Fed has no idea that their words and announcements have direct effect on the world marketplace, yet another point of frustration for investors.

Gold and silver both began Wednesday sporting losses, despite making solid gains in the overnight hours. The reason gains turned into losses for precious metals can be directly attributed to the US economic news that was released on Wednesday. It seems as all of the investing world is keeping its eyes on the US in the wake of today’s economic news and in the lead-up to Friday’s jobs and FOMC reports.

As we bring the month of July to a close it must be noted that gold has made gains of nearly $100. $100 may not seem like much but it is better than the losses gold has been posting over the past few months. The same types of gains were not realized by silver in July though silver has still netted a minor gain for July barring a heavy loss by the end of today.

Wednesday’s Economic News

Before we get into the economic news that was released on Wednesday, it must be noted that the FOMC’s statement for this Friday’s meeting is going to be released later on Wednesday and has a possibility of moving the spot values of precious metals in one direction or another.

The first bit of economic data which was released on Wednesday was the second-quarter GDP report. The general consensus indicated that GDP would rise by about .9%, though actual figures came back as improving by 1.7%.

The ADP jobs report was also due out Wednesday and also came back better than expected. It was agreed that ADP jobs figures would come back up around 180,000 though actual figures improved by 200,000. Both of these reports can be directly linked to the reason(s) why gold and silver fumbled their overnight gains in the early morning hours.

Investors Await Friday’s Reports

Despite Wednesday’s early morning economic reports being adversarial to gold and silver, the negative impact they had was softened due to the fact that most investors are holding their positions until Friday.

Friday is bringing with it the week’s top two news stories in the form of a Federal Open Market Committee meeting as well as the latest US jobs report. As far as the FOMC meeting is concerned investors are expecting to more or less hear what Bernanke had to say two weeks ago reiterated. If this is the case, spot values of precious metals will likely not react too drastically as we will be hearing a recycled version of the report Bernanke gave us and US Congress a few weeks ago.

The jobs report, if anything, is shaping up to be bad news for precious metals. Market experts are predicting that non-farm payrolls will have risen by 175,000 and if this is the case it is likely that the unemployment rate will fall from 7.6% to 7.5%. If this news is true it stands a better chance of boosting the US Dollar and stock markets than it does precious metals.

Only time will tell if what is expected out of these reports will come to be, and because of that investors will patiently await the last day of the week.

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.

Gold and silver began Wednesday down significantly on more liquidation following last week’s Federal Open Market Committee meeting. Stronger than expected economic data out of the United States gave investors and market watchers more belief that the US economy is recovering at rapid rates. As of now the monthly bond-buying currently employed by the US Federal Reserve is very much up in the air and with each better than expected bit of economic data out of the US the spot value of gold and silver falls. Weak physical demand despite low prices is yet another thing keeping gold subdued as well.

Asia In the News

More often than not, when the spot price of gold and silver falls, the physical demand for the metals grows because investors feel as though they are getting a better deal. There would be no time for these coined “bargain hunters” to be hitting the market than now, but such has not been the case. Even with gold and silver in the midst of what can be viewed as a free fall, the high demand for gold and silver out of Asia that we are used to at this time of year simply is not there.

A credit crunch in China, which monetary officials say is only temporary, is causing the average household to have less expendable income. So long as people aren’t able to spend as much, gold and silver will be put on the back-burner and will in no way be a purchasing priority.

India, which is known for a large physical demand for metals, has seen their demand for precious metals drop due to taxes imposed, by the government, on gold imports. These taxes were instituted to help correct a worsening trade deficit and have worked to more or less completely turn Indians off on the idea of buying gold or silver.

Wednesday saw Asian stocks post mixed results in response to the credit crunch only being temporary. Keep in mind  that monetary officials stated the cash crunch is only temporary, that does not necessarily mean that such is the case.

European Central Bank Announcement

President of the European Central Bank, Mario Draghi, announced that his bank and its officials will retain their current, accommodating monetary policy for the foreseeable future. This news lifted tiny amounts of pressure off of precious metals, but in the end did not move the market much.

Draghi’s statement more or less mirrored other world central bank presidents statements as it seems the United States is the only country thinking about employing tighter monetary policies in the future.

Rounding Out the Week

As we jump into the second half of the work week, investors and market watchers are going to be watching the spot price of gold and silver to see just how low it can/will go. Many feel as though both gold and silver have bottomed out at this point, though no one can say for certain.

With few major economic stories to latch onto this week, it is looking like the last few days will be considerably rough for precious metals.

Gold and silver both made some small gains in the early parts of Wednesday as the Federal Open Market Committee meeting is still going on. Most world markets have been quiet for the large part of yesterday and in the early parts of Wednesday, though that will likely change by this afternoon. Keeping with recent market trends, the US Dollar has done little movement in the overnight and early morning hours of Wednesday. Apart from the ongoing FOMC meeting, precious metals investors are taking a notice to the civil unrest that is happening in both Turkey and Brazil. Should either or both of these situations escalate from the tumultuous spots they’re in right now, we could see some new safe-haven demand for both gold and silver.

FOMC Meeting and Speculation

The Federal Open Market Committee, commonly referred to as the FOMC, is the branch of the the US Federal Reserve that is in charge of deciding and implementing monetary policies. They typically meet at least once a month, but very few of these meetings have the major implications that this particular one has.

Quantitative Easing is the monetary policy in place in the United States now, and has been that way for some time. QE works by pumping large quantities of money into the economy in an effort to devalue the US Dollar. A devalued dollar makes for more attractive exports which, in turn, gives the economy a boost. Up to this point it is generally agreed that QE has fulfilled its purpose and that it is no longer necessary, but there are those who disagree with this thought.

No matter how much speculating is done, we will still have to wait until later this afternoon to hear what the outcome of the meeting is. Ben Bernanke’s post-meeting press conference will undoubtedly help investors decide whether they should be selling or buying gold and silver. 

Rest of the World Outlook

This FOMC meeting is sucking up most investor’s attention, and for this reason most other economic activity around the world is subdued. This is seen in the fact that Asian and European stock markets are posting mostly stagnant, mixed results on Wednesday. US monetary policy means a lot to people all over the world, not just those in the US. The outcome of this meeting will be dwelt upon and likely have a big influence on how investors will act in the coming days and weeks.

The US Dollar is also holding its position on Wednesday, likely due to the fact that the FOMC meeting is still going on. As you can see, this meeting seems to be the only thing people are talking about this week.

Rounding Out the Week

As we move into the second half of the week it will be interesting to see how investors react to the outcome of the FOMC meeting. Since this is more or less the only groundbreaking story in the news this week, it will have major impacts, one way or another, on the precious metals market.

After yesterday saw marketplaces around the world take on more of a risk off mentality, today is significantly quieter and calmer. With China taking the day off and the Nikkei Index only moving a little bit, one of the most volatile parts of the world has decreased its volatility, at least for now. We discuss emerging market trends while also touching on European news that, for once, was not shrouded in negativity and harsh speculation.

Calmer World Markets

After yesterday saw investors around the world take on more of a risk-off mentality, things got pretty crazy for much of the day. While the mentality is still the same, for the most part, things have calmed down significantly. European stock markets hovered around near-normal levels while some good economic news was reported from the region for the first time in quite a while. From March to April, industrial production across the euro zone rose by just shy of half of a percentage point.

There are some people who believe that this news is indicative of a recovering European economy, but I am not one of those people. This is one isolated bit of good news out of Europe, when most of the news we have been hearing out of the region lately has been nothing but negative. Maybe if a few more weeks of strong stock market runs and better economic news is witnessed then we can start talking about an improving European economy.

Trending Activities

Over the course of the past few days we have been witnessing marketplace trends from all across the world. These particular activities have been noticed by a lot of people, but are and should be particularly interesting to precious metals investors.

Bond yields in many parts of the globe have been on the rise. Yesterday we saw Greek bond yields top 10% while today we saw a German government bond auction yield its highest numbers since this past February. It isn’t only Europe who is seeing this kind of activity either, as US Treasury bonds have hit multi-month highs very recently too.

Another activity we have seen is the widespread dumping of mid-level currencies from emerging markets in places like Thailand, India, and Malaysia. This may not seem like big news because we aren’t talking about the Yen, Euro, or USD, but if people begin letting go of currency investments, we could see it have positive impact on precious metals.

Rounding out the Week

There are no major headlining economic reports or announcements coming up in the next 2 days, so it is expected to be a quiet end to the week. With marketplaces around the world not doing much moving on Wednesday and zero big news stories coming up, a slow end of the week looks all but guaranteed.

With that being said, it must not be forgotten that markets love to surprise at the end of the week, so it is always important to stay tuned in.

Gold and silver made modest gains in the overnight and early morning hours on Wednesday, most likely because of a weaker US Dollar. Overnight the Japanese Yen gained some ground against the dollar as weaker Japanese stocks prompted a stronger Yen. European data released on Wednesday once again indicated that the eurozone as a whole is and will continue to suffer for the time being. With a European Central Bank meeting tomorrow, you would think that the continent’s leaders would be striving to come together in order to formulate some sort of solution for the ailing region.

Europe’s Struggles Continue

If you are like many investors who watch over the many European economies that make up the eurozone, you probably cannot remember the last sustained run of good economic form from the region. As of late all Europe has been doing is declining or stagnating and so far no one has come up with any sort of solution to remedy the growing issues.

On Wednesday it was announced that retail sales fell by about half of a percentage point in April when compared to March and declined by over 1% from April of last year. A data company from Europe, Markit, announced that its gauge of manufacturing and service sectors of Europe was sitting at 47.7 in May compared to a reading of 46.9 this past April. While these numbers may mean nothing to you, an important note to make would be that any number under 50 suggests that the economy being evaluated is contracting. This report is the second in two weeks which suggests that the European economy is contracting.

Japanese Nikkei Index Continues to Slide

Last week was a tough one for traders invested in Japanese stocks as the Nikkei Index took fairly large hits all week long. Things looked as though they might be getting better yesterday when the Index gained back some of its substantial losses, but today shows us that such might not be the case. The Nikkei Index posted even more downtrodden numbers on Wednesday to bring the Index’s two week slide up to an astonishing 18%.

Japanese stocks and bonds are faring so badly, in fact, that their negative output has had negative affect on other Asian markets. China and its stock market are continuing to suffer this Wednesday in the wake of a mixed-bag of economic news released last weekend and the bleak outlook of the Japanese market.

Rounding Out the Week

As we head into the last few days of the week, the same two things that we have been awaiting this whole week are still the two main pieces of news to look out for. On Thursday we will see what materializes from the latest European Central Bank meeting, especially considering that the region has a plethora of issues to address.

On Friday, investors and market watchers will be paying attention to a US unemployment report. Unemployment reports are always important pieces of information when assessing the US economy, but even more emphasis will be placed on this particular report as last week saw an unprecedented rise in jobless claims. With the future of monetary easing in the US up in the air, every and all reports coming from the world’s largest economy will be watched over with increased scrutiny.

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.

Treasury Bonds

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.

Both gold and silver made solid gains in the overnight and early morning hours on Wednesday, despite it being thought that the morning would remain flat for metals. Reuters.com reported that the stronger numbers seen as markets opened in the US for both gold and silver can be attributed to strong demand from China who is the world’s second largest buyer of gold behind India. As Wednesday moves on investors more readily shift their attention to the US Federal Reserve as its chairman is scheduled to address Congress about the current state of the economy as well as the future of monetary policy in the US. This single story has the chance to have major impact on the spot values of both gold and silver moving forward.

Bernanke Speaks to Congress

Though we still have to wait until Ben Bernanke, Fed Chairman, addresses Congress about the economy and monetary policy, there are plenty of people who think they know exactly what his address is going to consist of. The popular, ongoing thought is that Bernanke is going to announce  that the Fed’s monthly bond-buying initiative is going to be wound down and eventually stopped in the near future. The reason for this is that many believe the US economy has improved enough from the economic collapse in 2008 that the pumping of money into the economy by the government is no longer necessary. Whether this is true or not is a matter of debate in many circles, though one cannot really argue against the results we have seen from both the US stock markets and the USD as of late.

Should it be announced that QE will be wound down, you can expect this news to be incredibly bearish for both gold and silver. With that being said, there are still plenty of people out there who think that Bernanke will announce that he is still confident in Quantitative Easing and will not make any major changes to the bond-buying program. This type of address to Congress would be bullish for metals, or so many people believe.

FOMC Notes and China

Another piece of news set to be released on Wednesday are the notes from the latest Federal Open Market Committee meeting. This is yet another place where investors could catch some news about the future of monetary policy in the United States.

Looking forward to tomorrow, precious metals market watchers will be paying close attention to China’s latest manufacturing data. Though this news story may not have immediate affect on the movement of gold and silver spot values, it will help us better understand China’s economy and just how well (or badly) it is doing.

Since China is one of the world’s largest consumers of both gold and silver, any economic news from the country should not be taken lightly by investors.

Rounding Out the Week

As we move into the last few days of the week, there are not too many things to look out for besides the stories that have been mentioned above. As always, investors will keep their eyes fixated on the movement of both the US stock markets and Dollar as those two entities have been dictating the movement of precious metals more so than anything else lately.

Gold and silver are continuing along their recent downward trend as commodities are just about the last thing investors are interested in as of late. By nearly midday on Wednesday gold is down almost 30 dollars while silver’s losses on the day are approaching three quarters of a dollar. Between the US dollar gaining value in comparison to other major world currencies and the Japanese stock market posting impressive numbers that have not been seen in over half of a decade, there is no room for commodities to gain a solid foothold.

Japanese Monetary Easing Destroying Precious Metals

The Japanese stock market has been hitting on all cylinders lately and it is unclear as to when or whether it will slow its progress down. Due to recent monetary easing measures set forth by the Central Bank of Japan, the Yen currency is down and stock markets are doing better than ever.

With investors seeing the Japanese market as a place of much less risk than it was only a short while ago, their interest is focused there as opposed to safe-haven assets such as precious metals.  Large-scale investments in gold and silver are typically reserved for times of economic uncertainty and while that was the case a few months ago, Japanese stocks are becoming much more reliable as the Nikkei index continues to rise. Going hand in hand with this is the fact that the Japanese Yen is hitting historic lows when compared to the USD which is gaining value at increasing rates.

Europe…

On Tuesday there was good news to report out of Europe as industrial production in the region was up by about a whole percentage point this past March. That is the biggest improvement in industrial output in almost two years. While that good news was well-received by Europeans of all walks of life, Wednesday brought with it the disappointing news we are used to hearing about from the eurozone.

Not only did the euro currency lose value in comparison to the USD, but first quarter 2013 GDP posted negative growth. The negative .2% GDP growth in Europe for the first quarter of 2013 helped many people realize that Europe has a long way to go until they are finished with their economic troubles. These most recent news stories have prompted investors and market experts to think that the European Central Bank will push forward with their easy monetary policy that they introduced earlier this year.

The Bank of England announced on Wednesday that their economy is slowly but surely recovering, but this recovery process will take some time. This was their way of saying that currency stimulus will continue throughout the UK for the foreseeable future.

Rounding Out the Week

While there is still room for gold to improve its position, this is seeming more and more unlikely as the minutes and hours tick forward.

There are a few economic reports set to be released in the US during the latter part of Wednesday but it is unlikely that they will have too big of an impact on precious metals, or any commodities for that matter. Gold and silver are fighting the US dollar as of late and until the green currency halts its march forward it is unlikely that gold will be able to turn things around.