While many expected gold and silver to remain relatively flat in the early morning hours on Wednesday, they surprised investors by making some solid gains. At around 9 AM gold was up around 17 dollars while silver made gains of a little over 30 cents. Anyone interested in precious metals is anxious at this point as today is the day US Federal Reserve Chairman, Ben Bernanke, addresses congress about the current state of the economy as well as the future of monetary policy in the United States. Reuters reported that gold and silver’s early morning gains on Wednesday were due to strong demand from China, who is the world’s second largest gold consumer after India.
Ben Bernanke, FOMC Minutes
Two things will catch the eyes and ears of investors today, and those are both Bernanke’s address to Congress as well as the notes from the latest Federal Open Market Committee meeting. Both of these bits of information are expected to shed some light on the future of monetary easing; something that will likely have major implications for the precious metals market.
The popular thought/rumor up to this point is that Ben Bernanke, in his address to Congress, will announce that the Fed plans on winding down the Quantitative Easing program that has been buying millions of dollars in bonds each month over the course of recent history. Now that it seems as though the US economy has regained much of its strength from the monumental economic collapse we saw in 2008, it is thought that the pumping of money into the economy by the Federal Reserve is no longer necessary.
With that being said, there are still plenty of people who think that Bernanke will reaffirm his faith in QE and not announce or unveil any sort of plans to end it. If there is no announcement on the future of QE, and the program remains intact, you can expect this news to be bullish for gold and silver.
Bank of Japan Meeting
On the other side of the world, there was a Bank of Japan meeting which had the chance to impact the metals market, but didn’t. The BOJ announced that their aggressively easy monetary policy that was instituted only a few months ago will remain running strong; news that almost immediately brought down the value of the Yen further.
Other market-relevant news in Asia is the latest bit of manufacturing data out of China. Though it is not expected that this news will have too much of a direct affect on gold and silver, there is always a chance when it comes to China. Moreover, people will be keeping their eyes glued on China in order to determine the current strength of their economy, something that has been called into question lately.
Looking Ahead
As we move into the rest of Wednesday and thus the rest of the week, many of things to look out for will be happening sooner rather than later. Both Bernanke’s speech and the FOMC minutes are expected to be released later this morning, and China’s manufacturing data will come out on Thursday.
This next day and a half or so could have major implications on the spot values of both gold and silver moving forward.