Gold and silver have gained a little bit of strength on Wednesday, in the wake of a less than stellar past few days; stretching into last week. The world marketplace is focusing heavily on the upcoming European Central Bank meeting, which is set to yield a major shift in European monetary policy.
Stronger US economic data has been reported in the early parts of the week, something that has helped the US Dollar make substantial gains against the euro currency, which has declined in value steadily as of late.
ECB Meeting Means A lot for Many
Last week’s reports of incredibly low inflation rates across Europe, coupled with the fact that economic recovery across the region isn’t hitting on all cylinders has prompted many to believe that the European Central Bank will loosen monetary policy by slashing rates at its upcoming meeting. The growing belief that the ECB meeting will yield an alteration to monetary policy has caused a sharp decline in the euro currency which prompted a sharp rise in the value of the US Dollar.
Gold and silver were on the wrong end of this as the surging USD put heavy downward pressure on precious metals over the past few days. Stocks in Europe, however, are doing better than ever as the Stoxx 600 Index hit a high that has not been realized in about half of a decade. Even though stocks are rising on the notion that Europe’s key interest rate will be reduced by the end of he week, some experts are sure that this month’s meeting will yield no monetary policy changes.
With that being said, inflation rates are so low that the possibility of rampant deflation is growing each week. This is yet another reason why so many believe that the ECB has no choice but to reduce its key interest rate. Keep your eyes and ears posted in the coming days, as an announcement in regards to European monetary policy may come at any time.