Precious metals spot values are mixed to slightly lower during the early morning hours of Wednesday, pressured once again by the activity going on in currency markets. This week has thus far proven to be a good bit slower than expected, and that fact alone has weighed fairly heavy on the spot values of precious metals. With little to look forward to throughout the duration of this week, I expect that the attention of investors will remain locked on currencies from around the world.
On the geopolitical front, tensions in Ukraine are now just a shadow of what they were a few weeks and months ago. The reason for this is due to a ceasefire agreement that was reached last week between Russian/pro-Russian and Ukrainian military forces. Now, many humanitarian missions are playing out in some of the most war-torn regions of Ukraine. Though things are quiet now, we will continue to keep a close eye on Eastern Europe as there is no real way of telling how long this ceasefire will last or if it will lead to any real, concrete peace talks.
Next Week’s FOMC Meeting Takes Center Stage
Now that last week’s sub-par US employment report has been mulled over and digested, there really isn’t much for investors to focus on this week. While the progress of the US Dollar and continued devaluation of the Euro currency are very important to the investing world, there has been little else able to draw attention away from currency markets.
Next week, however, all that will change as the marketplace is gearing up for the Federal Open Market Committee’s latest policy meeting. With talks of higher interest rates in the near future and the imminent ending of Quantitative Easing, it seems as though this month’s meeting will yield a lot of useful information. In fact, just a day ago, a report released by the San Francisco Federal Reserve indicated that investors just might be underestimating how quickly the Fed can raise interest rates. This survey alone was enough to convince a boatload of investors that higher interest rates are coming sooner than originally anticipated. As a result, the US Dollar has been able to gain even more value against the declining Euro currency.
As time plays out, and EU economic policy continues to diverge from that of the United States, it is very likely that the value of the two regions’ respective currencies will continue to move in opposite directions. This news alone is none too favorable for precious metals.