February 4th Midweek Silver Market Update

Gold and silver spot values gained nicely on a day where very few events caught headlines. In fact, this week has been, for the most part, pretty slow and devoid of any major economic developments. Of course, this is all besides the fact that a few major central banks made some policy moves that sort of took the market by surprise.

As we look ahead to the last few days of the week, the market will almost inevitably turn its attention to the release of the US employment report for the month of January. The US employment situation has long been at the center of attention for investors, and this time will be no different. As we move forward into this year, the employment situation in the US will remain under the microscope as many analysts are eager to find out if wage growth will improve at all this year. Last year, despite a falling unemployment rate, wages across the board did not really budge. Under ideal economic conditions, wages should increase by considerable margins periodically. Until that happens, it is very difficult to call the US a top-performing economy.

Central Bank Decisions Catch Market By Storm

On Tuesday, it was reported that the Australian Central Bank was reducing its interest rates in an effort to spur along the economy. This news was surprising and almost immediately saw the AUD fall to a 5.5 year low against the Dollar. This move adds to ongoing currency wars that are currently unfolding across the globe.

For gold and silver, continued currency wars are a good thing simply because of the level of uncertainty they create for investors. With that said, however, should the US Dollar continue to benefit from currency wars, upside may be limited for gold and silver. For now, however, metals continue to benefit from the wide array of moves being made by central banks.

In the early morning hours of today, it was reported that China decided to reduce its reserve requirement ratio for domestic banks. This move was also made in an effort to stimulate the Chinese economy which has been falling behind for the better part of the last 12 months. For precious metals, this was good news as China is the world’s largest importer of raw commodities.

As time moves on, it will be interesting to see how the past two days’ moves affect the economies in question. In all reality, they can’t make things too much worse than they already are.

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