Gold and silver are trading lower for yet another day this week, adding to a growing downward spot value trend. Currently, gold is hovering around the $1,300 threshold and threatening to fall back below while silver has already fallen below $20. It is now pretty clear that the rally by gold and silver is finished as the market has essentially forgotten about the situation in Ukraine.
Barclays announced today that it revised its outlook on gold upward today, though their revision sees spot gold end the year below where it is at currently. According to Barclays, spot gold will be somewhere in the neighborhood of $1,250 when the year comes to a close. This forecast is much better than their original forecast of $1,205.
Quiet Week Has Been Working Against Gold, Silver
The fact that the crisis in Ukraine is thought about less and less with each passing day has stripped the market of its need for safe-haven assets. This, in turn, has worked against gold and silver significantly over the past two weeks. As safe-haven demand declined, investors began ridding themselves of their precious metals, causing massive spot value declines.
As if that wasn’t enough, Janet Yellen made comments last week that further dampened the outlook on precious metals. While talking to the media, Yellen said that if QE is done away with by the end of the year, interest rates in the United States may be risen as soon as next spring. The rising interest rates would make ownership in gold more expensive, less profitable, and generally unappealing to the market.
In other news from around the world, the Chinese central bank is reported to have recently been considering changes to their monetary policies in order to stimulate their ailing economy. Since the turn of the year, the Chinese have given the market nothing but disappointing economic and financial news. Last week the market caught wind of a rumor saying that yet another Chinese corporation was going to default on bond payments. This week, on Monday, the Chinese were the focal point of yet another disappointing piece of manufacturing data.
Now, the investing world is concerning themselves what, if anything, the Chinese central bank will do to combat the past three or so month’s worth of dismal economic data.