Gold and silver are trading slightly down for the second day in a row as most world stock indexes are reporting gains. Despite last week’s weaker than expected December jobs data from the United States, gold and silver were unable to sustain the momentum they were given on Friday. Wednesday was a mostly quiet day around the global trading atmosphere, but almost all movement posted by worldwide equity markets was upward.
Though there was not much US economic data on today’s slate, a retail sales report did well to rectify investor confidence in the US economy, of which was delivered a blow as an outcome of last week’s employment report.
World Bank Predicts Increased 2014 Growth, World Markets Respond Confidently
A few months ago it was reported that the World Bank predicted sub-par worldwide economic growth for this year. Though most regions of the world were expected to have a positive 2014, the level of growth predicted by the World Bank was unsatisfactory to some. Today, however, the World Bank more or less amended their earlier prediction by saying they expect a higher level of growth than previously thought. Most world stock indexes responded favorably today, exhibited perfectly by many European stocks hitting multi-year highs today.
In the United States, the monthly retail sales report released today was upbeat and encouraging to investors who were a bit skeptical of the US economy’s strength after last week’s employment data. The retail sales report boosted both US stock indexes as well as the US Dollar. As you could have probably guessed, all of this positive stock index action across the globe translated into selling pressure being levied against precious metals. Today is looking like it will effectively turn the tide of what was expected to be an upbeat week for precious metals. After last Friday’s gains by both gold and silver it seemed as though metals were gaining momentum, but as we have witnessed all too often over the past year or so, no gains made by gold and silver are guaranteed to be sustained.
Perhaps even more disheartening for precious metals investors was a report indicating that two voting members of the FOMC hope to see bond-buying, Quantitative Easing done away with by the end of 2014. If last December’s decision to taper QE is any indication of what might happen should future tapering measures be pursued, precious metals investors have good reason to worry. If you look at Europe and the United States over the last few months, the growing consensus is that easy money policies are no longer needed. The less cash that is being pumped into economies around the world by their governments, the more valuable paper currencies will become. As is almost always the case, stronger paper currency values translate directly into lower precious metals spot values.