After yesterday’s very evident risk-off mentality, the marketplaces around the world were significantly quieter on Wednesday. China had the day off due to a public holiday and we witnessed some European economic news that is hitting on a positive note for once. The US Dollar does have a stronger position on Wednesday, but it has not surged so much as to effect the price of gold too negatively at all. In the early morning hours, gold and silver are trading at about even.
Recent Market Trends
There are a few happenings in the world marketplace that need to be brought to the attention of investors, especially precious metals investors. The one major theme we have witnessed very recently is the rising bond yields around the world. Proving my point was the fact that German bond yields hit their highest point since this past February while Greek yields were up about 10% yesterday. Additionally, US Treasury bonds are also recording yields that are the highest they have been in months.
Another trend we have been witnessing is the fact that mid-level currencies such as those out of India, Malaysia, and Thailand have been facing heavy downward pressure lately. While many of the traders who are getting rid of these currencies are simply trading one currency for another, other traders are abandoning the thought of investing in currencies altogether. Both these trends can end up being positive for gold and silver, but have so far not done much to move the metals one way or another.
Calmer Marketplace
After the last few days have been quite turbulent for both European and Asian stock investors, Wednesday was significantly more serene. In fact, we finally have some good news to report out of Europe as industrial production across the region rose by just shy of half a percentage point from March to April. This marks the third straight month that industrial production has risen in the euro zone, one of the few positive bits of information coming from the region.
Though I do not personally believe this is a sign that the European economy may be fixing itself, there are some people that do. Only time will tell if Europe can right the ship, but without any proactive action by their central bank and governmental leaders, I cannot foresee it happening any time soon.
The Nikkei Index is slightly down again today on Wednesday, bringing its decline from last month’s record high to about 15%.
Looking Ahead
As we move forward into the last few days of the week, keep an eye on the market trends that were previously mentioned in this article. Expectations are that if things continue along this path, gold and silver could walk away with the spoils.
With a calmer marketplace and no major headlining stories set for Thursday and Friday, it looks, at least on paper, like we will have a relatively clam rest of the week.