Gold and silver both posted minimal movement in the overnight and early morning hours of Wednesday, though this is not too surprising. After a good bit of economic data that was released on Tuesday did well to bring both metals down in value a bit, higher than expected crude oil prices took some of the downward pressure off of gold. Still, strong US stock markets and an equally strong US Dollar ensured precious metals that they would not make any gains on Tuesday. Wednesday sees us focusing on US Treasury Bonds and their recent rise ahead of the upcoming auction.
Higher Trading Treasury Bonds
Because of last week’s address to Congress by Federal Reserve Chairman Ben Bernanke, the marketplace will be taking an even closer look at any economic news out of the United States. It seems as though the next few weeks of economic data is what the future of Quantitative Easing is hinging on, or at least that is how investors are going to treat it.
In the hours before a $35 Billion Treasury auction of 5 year notes 10 year T-notes rose by over 2 percent, which is their largest jump forward in over a year. This news only solidifies the growing belief that the US economy is doing well enough at this point that Quantitative Easing is no longer necessary. These Treasury Bond numbers are coming in the wake of recently solid economic news out of the United States. Despite this news being almost entirely in support of the end of QE, precious metals are not taking it on the chin, but are rather rolling with the economic punches quite well over the past few days. While not quite there yet, gold has its eyes on the $1,400 mark, which is a far cry from its near $1,320 low back in April.
Other World News
Some overnight news that is not very surprising is the fact that European stocks were downtrodden a bit in response to worse than expected German employment reports. The OECD expects that Europe will experience a larger than expected contraction in economic growth, perhaps bigger than last year’s.
Asian stocks are back to their old ways and performing well, which is no surprise after how well the US stock markets performed yesterday. Stocks in Asia and the US have been mimicking each other as of late while their currencies are moving inversely from one another.
Looking Ahead
There are a few economic reports being released in the US today, though their effect on the market will be minimal at best. The reports being released to the public today are both the mortgage applications survey and the latest retail sales report.
Trading, especially in the metals market, has been sideways to start today and while gold should be falling steadily, it is putting up quite a bit of resistance.