For the third consecutive day this week, gold and silver are trading lower and being negatively affected by a lack of bullish data. The FOMC is set to conclude their monthly policy meeting this afternoon, at which point Janet Yellen is set to address the press for the first time since being appointed chair of the Fed.
The marketplace was also greeted by additional rumors regarding the questionable economy in China. Recent news from the world’s second largest economy has been sub-par lately and in stark contrast to earlier forecasts claiming the Chinese economy would grow by significant margins in 2014.
Crisis In Ukraine On Back Burner, For Now
Last Sunday, the citizens of turmoil-ridden Crimea participated in a referendum to determine whether the region would remain part of Ukraine or join the Russian Federation. As expected, the overwhelming majority of those who participated in the vote decided to rejoin Russia. Officially, over 90% of voters decided to join Russia, a number that isn’t too surprising when you consider the fact that Crimea is dominated by ethnic-Russians.
Despite the referendum going the way of Russia, there has been no violence as a result of the vote. For this reason, tensions surrounding Russia and Ukraine have deescalated and the situation in general is heading to the back burner. Safe-haven demand for precious metals has also decreased considerably due to the fact that there has yet to be any real bouts of violence throughout the whole crisis in Ukraine.
With all this being said, we will continue to keep an eye on Ukraine as this crisis is still far from resolved and the threat of violence is still looming.
Chinese Economic Worries Grow Stronger
A few weeks ago, the first corporation in Chinese history defaulted on bond payments, an event that sparked some worries about the strength of the Chinese financial system, and economy in general. Today, rumors are circulating that another Chinese company is defaulting on bond payments too. Even though these rumors have yet to be confirmed, they are unnerving to say the least.
These financial woes following so close to recent sub-par industrial data is making investors worry about the prospects for China’s economy further along this year.
As tensions in Ukraine continue to calm down, investor risk-appetite is continuing to grow. As US equities continue to gain value, it will be difficult for gold and silver to recover from the last few days’ losses.