Gold and silver spot values were able to halt their respective declines in the early morning hours of Wednesday thanks to some better than expected Chinese economic data. After the first two days of this week saw precious metals, including platinum and palladium, do little else besides decline in value, most figured something would have to give eventually. While massive amounts of value have been lost, it is at least mildly encouraging to see metals fighting back on Wednesday in order to mitigate early week losses.
Janet Yellen Addresses Catch Market’s Complete Attention
The market’s biggest concern coming into this week was with regard to Janet Yellen’s semi-annual addresses to Congress. After last week’s FOMC minutes from their June meeting failed to offer any valuable insight into if and when interest rates in the United States would be raised, attention naturally shifted to the Fed chairperson’s scheduled speeches.
Yesterday provided investors with a bit of new information as well as a bit of information that was already more or less known by the whole of the investing world. Ms. Yellen’s address to Congress on Tuesday was two-fold; first, she began by reiterating the FOMC’s intentions of abandoning Quantitative Easing entirely before they meet for their October policy meeting. This news had little impact on the marketplace as it was already more or less known that QE was on its way out before long.
The second part of her address, however, gave investors exactly what they were looking for. Yellen held that so long as the US employment sector continue to show noticeable signs of improvement over the course of the next few months, the Fed may have no choice but to raise interest rates. This small bit of information was perceived by the market as meaning that interest rates in the United States will, in all likelihood, be raised sooner than what was originally anticipated. Her hawkish remarks ended up prompting follow-through selling of gold and silver only one day after both metals conceded a plethora of value. In her remarks today, Ms. Yellen did what most people expected her to do and simply reiterated statements made a day ago. Now, investor attention will continue to be fixated on Ms. Yellen as she prepares for the all-important question and answer session with members of Congress.
As we head into the latter half of the week, the market will continue to be fixated on the price movement of precious metals. While it now seems that the bears have technical control of the market at present, any number of ongoing geopolitical events stands the chance of dousing the risk-appetite fire and once again instilling strong safe-haven demand. Chief amongst these ongoing geopolitical developments is the continued bombardment of the Gaza Strip by Israeli rockets and air strikes. With a Palestinian civilian death toll of more than 180 at present, things are only deteriorating further with each passing day. Oddly enough, however, the market seems to have paid only marginal attention to this situation as risk-appetite continues to flourish this week.