Precious metals have made some moderate gains in the early morning hours of Wednesday mostly thanks to some weaker than expected economic data out of the US. We continue to focus on Europe as the EU has been a hotbed of economic data over the past 7 days or so.
So far the week has been a positive one for precious metals as gold opened up the week on Monday making impressive gains. Tuesday saw the yellow metal post small losses, but those same losses were regained in the morning hours of Wednesday. Silver, on the other hand, has done nothing other than make positive gains so far this week.
Producer Price Index Report in the US
The piece of information investors were awaiting on Wednesday was the latest producer price index in the United States. It was reported that wholesale prices made no changes in July, though in June the same wholesale prices posted gains of .8%. Meanwhile, the core PPI for the United States made a minimal gain of .1%, a reading that was lower than the expected .2% rise.
This data has thus far helped spot prices make gains. Later in the day we expect to hear the president of the St. Louis Federal Reserve bank make a speech. It is likely that he will address Quantitative Easing’s future in some regard, though if he is anything like many other Federal Reserve bank presidents, his statements will likely be extremely vague and borderline misleading.
If Mr. Bullard makes no clear statement regarding Quantitative Easing today, investors are turning to the Federal Open Market Committee’s next meeting in September as the time where they expect to hear much more definitive information regarding monetary policy in the United States going forward into 2014. As recently as yesterday, Dennis Lockahrt, president of the Atlanta Federal Reserve bank, stated that the most recent run of economic data from the US has not been consistent enough to say one way or another what the fate of QE is going to be.
EU Economic Hopes Looking Up, Partially
As if it wasn’t evident already by the last week or so’s worth of upbeat economic data, the EU has stepped out of the shadow of economic recession. In the wee hours of the morning on Wednesday it was reported that EU GDP rose by .3% during the second quarter of 2013 in comparison to the first quarter. This was good news though it was a bit disheartening to hear that the year on year GDP data for the EU was down by .7%.
Also happening on Wednesday was a German government 10-year bond auction which yielded positive returns of 1.80%; the highest such yield in over a year. This data as well as most of the data that has preceded it has helped grow confidence in the thought that the European Economy is continuing along its road to recovery.
Despite a much better outlook on the EU, this news did not really do much of anything to the overall spot price of gold or silver. With that being said, online and brick and mortar dealers of precious metals are reporting that sales and demand are both on an upswing.