Gold and silver have been losing value fairly steadily this week as better economic news is being heard from every corner of the world. In the early morning hours on Wednesday gold was sitting at a 3-week low and was continuing along its descent.

So far this week we have heard decent economic news from Europe and China as well as some remarks from members of the Federal Reserve in regards to the future of monetary policy. While most of this news was bad for the spot values of gold and silver, the US Dollar Index refused to gain value, easing some of the downward pressure being placed on precious metals by outside markets.

Members of the Fed Confuse Investors

Last week, investors were awaiting a scheduled meeting of the Federal Reserve which was set to take place on Friday. It was expected that the Federal Open Market Committee would make remarks similar to those made by Ben Bernanke a few weeks earlier, statements that were more beneficial to gold than anything. When the FOMC did meet, the expected came to be as they reiterated Ben Bernanke’s sentiment that Quantitative Easing, the government’s monthly bond-buying initiative, was not guaranteed to be abandoned by the end of the 2013 calendar year.

Yesterday, however, the president of the Atlanta Federal Reserve bank, Dennis Lockhart, made some remarks that were completely contrary to the FOMC’s meeting last week, and Bernanke’s press conference a week or so before that. Lockhart’s statements confused the marketplace while at the same time driving the spot values of gold and silver directly downward. He stated that there is still a strong possibility that QE will be wound down, if not abandoned, by the end of 2013. Though he offered no substantial details as to the parameters of tapering QE, his remarks were enough to make gold and silver seem less appealing as safe-haven assets.

Many investors and market watchers are frustrated due to the fact an influential government entity such as the Federal Reserve isn’t and hasn’t been on the same page about any issues lately. Taking that one step further, they make it very obvious that no one at the Fed is really confident in anything any of them are saying by coming to the public spectrum and making statements that are in direct contradiction to statements made not even 7 whole days ago.

It is becoming increasingly difficult for investors to be confident in any investment move they make because the information they are receiving changes faster than the weather.

European Economies on the Rise

Over the past 3 or 4 months if you were hearing economic news from the European Union, chances are that the news you were hearing was regarding a declining or stagnant economy. For a majority of the year thus far the European Union was one of the most under performing regions economically, in the world.

This week brought with it winds of change because over the course of the past few days the only economic news we have been hearing out of Europe has been oddly positive. First was Monday where the Purchasing Manager’s Index (PMI) reading for the Euro Zone finally eclipsed 50, moving the status of the overall economy from likely contracting to being the position to grow and expand. Next up was a report on Tuesday which stated that manufactured goods orders in the EU grew by almost 4% from May to June.

Finally, Wednesday was the third good day of positive economic news out of Europe as industrial production was up by almost 2.4% from May to June. Adding to that, the German economic growth rate was up by .3%, another positive reading.

This plethora of economic news has not been even partially beneficial for the spot values of gold and silver, though things could have been worse if it weren’t for a subdued US Dollar Index. While gold is struggling around a 3-week low, the USD Index has been sitting at its own 5-week low so far this week. If the US Dollar were to gain value anytime soon, the declines in we would see gold and silver suffer may be significant.

Though gold and silver made moderate gains in the overnight hours, they quickly returned those gains upon better than expected economic news Wednesday morning. Market experts are predicting that the effect this economic news will have on precious metals is going to be quite small due to the fact that the collective marketplace is awaiting the two marquis news stories of the week, both of which are set to be released on Friday.

Up until this point in the week both metals have done little moving for the same reason as was mentioned above. Even with the two major news stories of the week set to be released on Friday, both of them stand a strong possibility of not having any major effect on the spot prices of precious metals.

US Economic News

The first batch of economic news due out on Wednesday was the US second-quarter GDP report. Even though most market experts expected second-quarter GDP to rise by just a tenth or two of a percentage point below 1%, actual figures for the second quarter came in at up 1.7%. The second bit of data that came out on Wednesday was the ADP jobs report which increased by 200,000 versus an expected increase of around 180,000.

Though this news made gold and silver revert the gains they made overnight, it did not hurt them as much as it could have if the world marketplace was not gearing up for even more relevant market news on Friday.

Rest of the Week

As we round out the week and the month of July we have two key bits of information to look forward to for two days from now. Though the actual Federal Open Market Committee Meeting is scheduled for this Friday, the meeting’s written statement is being released late Wednesday. This will give investors a fairly clear picture of what they can expect to be stated on Friday, though most people are gearing up for a mostly uneventful meeting.

Also due out on Friday is the latest US Jobs report which is expected to more or less mirror Wednesday’s ADP jobs report. Expected figures indicate that non-farm payrolls will have risen by around 175,000. If all goes as planned as far as the jobs report is concerned the unemployment rate is predicted to fall from 7.6% to 7.5%.

Only time will tell if the economic news is going to come back as predicted, but if it does it stand a strong possibility of putting some downward pressure on overall demand for physical gold and silver.

Gold and silver were both able to make small gains in the early morning hours of Wednesday as Ben Bernanke’s speech’s prepared text was released, mulled over, and digested by most of the marketplace. As investors are well aware, Bernanke is set to address the US House of Representatives later this afternoon regarding the US economy and the future of monetary policy.

The US Dollar Index was a bit lower again Wednesday morning which helped gold move forward for the second day in a row. So long as the US Dollar Index remains subdued gold and silver will be able to make at least partial moves forward. Unfortunately, it seems as though precious metals are willing to fall at a much higher rate than they are making gains which is why it seems like spot values have been so low for so long.

Bernanke’s Prepared Text

Though the actual speech is not set to take place until later in the afternoon, the bulk of what Bernanke is going to say has already been released this morning. The overriding theme of Bernanke’s address seems to be that him and the Fed are intent on hanging on to their flexible policies, at least for now.

Quite contrary to what most people are thinking is the part of the prepared text where Bernanke indicated that if economic conditions took a turn for the worse any time soon the Fed is not going to shy away from boosting Quantitative Easing, or monthly bond-buying.

These remarks fall in line with what has been stated very recently. Bernanke even went on to say that there is no set timetable for when QE will be done away with. QE’s future is very much contingent on the way the US economy acts in the coming months, or so it seems.

Though his prepared text has already been released, he is set to speak later in the morning for real and at this point we could find out additional information regarding monetary policy, specifically QE.

Other News

European stocks took a bit of a downward dive on news of Bernanke’s prepared text as it seems to be adversarial to equities.

Asian stocks, on the other hand, experienced mixed results as trading was mostly subdued in preparation for Bernanke’s speech.

By the end of today we will find out for sure if Bernanke’s remarks are good or bad for the prospects of gold and silver going further.

Gold and silver started Wednesday down significantly as stronger US economic reports on Tuesday bolstered the ongoing belief that the US economy is in a state of definite recovery. A better economy only adds credence to the thought that the US Federal Reserve may wind down its monthly bond-buying in the near future. Many investors have become complacent with the current monetary policy in that they thought it would last forever, but as things slowly come crumbling down around them they are starting to realize that things are changing rapidly.

Asian Happenings

Historically, the summer months are when physical demand for gold in Asia is at some of its highest points annually. This year we have seen a cash crunch in China which has reduced the amount of expendable income the average Chinese household has.

India is another Asian country that usually demands gold and silver by the boatload this time of year, but recently their government added additional taxes on gold and silver imports in an effort to help balance a very disproportional budget.

All of this news has prompted the spot value of gold and silver to decrease which has caused other countries to fear the commodities’ future value. While this fall in the spot value has caused bargain hunters to come out in droves, there is still some uncertainty as to whether the prices of gold and silver have bottomed out (or come close to) or if the decline is going to continue over the next few days and weeks. At this point no one can say for sure whether we have seen the worst or not yet, but one thing that is for certain is that investors will be keeping their eyes peeled for literally any news story that might affect the values of gold and silver.

Asian stocks posted mixed results on Wednesday as the credit crunch seemed to be a little bit less of an issue. Chinese monetary officials announced that the liquidity crunch that is ongoing is/was only temporary and will/has be(en) dealt with as they see fit.

Europe Keeping the Course

The president of the European Central Bank, Mario Draghi, announced that him and his colleagues will retain the current, accommodating monetary policy for the near future. What Draghi announced is currently going hand in hand with what other central bank presidents from around the world have been saying in the last few days.

The US Dollar Index is on the rise and posted 3 week highs during the overnight hours. As of late there have been few things standing in the way of the US Dollar gaining value.

Looking Ahead

Large-scale gold and silver liquidation has been the theme for almost a week now and it would not be too surprising if we saw both metals’ spot prices fall further before the end of the day. Some people are thinking that both metals have bottomed out, though others hold that the decline is far from over. The only thing that is clear at this point is that no one really knows what is going to happen to precious metals.

Gold and silver started the day up a little bit, but not by any significant margins. The majority of world investors are maintaining their current positions as we await the outcome of the ongoing Federal Open Market Committee meeting. Tuesday saw precious metals lose some value, but the early parts of Wednesday gold and silver gained back at least some of their losses. On the whole, there is little activity going on around the world as far as trading goes.

Asian and European Outlook

Asian and European stocks posted mixed results on Wednesday as both markets are in more of a stagnant mood during the FOMC meeting. The meeting itself will conclude sometime in the early afternoon and will be followed up by a press conference led by Federal Reserve Chairman Ben Bernanke.

Investors will be waiting to hear if the Fed will make any major changes to monetary policies in the United States. If any large changes are made to the current policy of Quantitative Easing, precious metals could move drastically in one way or another. If QE is done away with or going to be wound down over the next few months this could spell bad news for precious metals. On the contrary, if it is announced that QE will be retained in the near future this could possibly be good news for precious metals.

FOMC Speculations

The aspect of every FOMC meeting that remains the same is that investors all over the world will speculate as to what the outcome will be. Most times there is no clear-cut outcome of an FOMC meeting, though this time it is fairly certain that a monetary policy decision will be made.

A few weeks ago we heard that Quantitative Easing may be done away with, though more recently the sentiment has changed with many people under the impression that it may be kept around for a bit longer. With how well the US economy has been doing lately it would make more sense for QE to be wound down over the course of a few months. QE’s purpose was to bring t he US economy out of the recession we saw in 2008, and at this point most people would agree that it has done its job perfectly.

A little later today Ben Bernanke will say for sure what the future of monetary policy will hold for the US. If QE is kept around for any extended period of time, this should be positive for precious metals. One thing is for sure, however, no matter the outcome of the meeting today investors will be either buying or selling silver and gold like crazy.

Looking Ahead

As far as the rest of the week is concerned there are not too many major economic stories to fixate our attention on. The FOMC meeting is what most investors will be basing their next plans of action off of and thus is the biggest news story we have to focus on.

With that being said, it will still be important to focus in on how world stock markets are acting.

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.

Precious metals started the day on Wednesday more or less stagnant, though both gold and silver were able to make minimal gains. Weak economic data out of Europe has added to the compounding pile of disappointing European news that will hopefully be addressed in some fashion at the upcoming European Central Bank meeting tomorrow. Today is another crucial day for gold as it began the day over the $1,400 mark, but it is still uncertain if the yellow metal will be able to retain this position.

European Economic News

It is no secret that economies across the eurozone have been struggling recently, and the latest bit of economic news confirmed that yet again. Retail sales across the eurozone were down by half of a percentage point this past April, and down over 1% from the same point last year. Markit, a data company from Europe, reported that its gauge of manufacturing and service in Europe is coming in at 47.7, which is better than the posted 46.9 this past April. While these numbers may mean nothing to you, any number reported under 50 suggests that the economy in question is contracting.

This news comes as no surprise as the European region has been struggling economically for the past year or so. Hopefully the European Central Bank’s meeting that is taking place tomorrow will address some of the seemingly endless issues facing Europe, though I wouldn’t and am not holding my breath.

Bleak Asian Outlook

About a month ago, the Japanese Nikkei Index was booming and every investor was taking notice to the fact that Japan was sporting one of the best economic runs in the world. That all seems like a year ago now because the last two weeks have been absolutely brutal for Asian stocks, specifically Japanese stocks.

Last week was one giant decline for the Nikkei Index, and while we saw some improvement yesterday, the Index tumbled yet again on Wednesday. Over the course of the past two weeks the Nikkei Index has lost about 18% of its value, truly an unprecedented number. As if it weren’t enough that the Japanese stock market is doing badly, their bad run has caused other Asian markets to suffer lately.

Perhaps part of the reason behind why gold and silver were able to make minimal gains in the early hours on Wednesday can be attributed to a weaker US Dollar. Overnight the USD suffered as the Japanese Yen made decent gains against it.

Looking Ahead

As we move into the final two days of the first full business week of June, we are awaiting news and meetings from both Europe and the United States.

On Thursday, like we have already mentioned, the European Central Bank is set to have their latest meeting. It is not clear what the main topic of their meeting will be, though if I were to guess it is going to have something to do with the current state of the collective European economy.

On Friday we will be talking about a US unemployment report that will be announced sometime during the day. Last week we saw an unexpected rise in jobless claims which increased the investor intrigue in this upcoming report.

Gold and silver both posted minimal movement in the overnight and early morning hours of Wednesday, though this is not too surprising. After a good bit of economic data that was released on Tuesday did well to bring both metals down in value a bit, higher than expected crude oil prices took some of the downward pressure off of gold. Still, strong US stock markets and an equally strong US  Dollar ensured precious metals that they would not make any gains on Tuesday. Wednesday sees us focusing on US Treasury Bonds and their recent rise ahead of the upcoming auction.

Higher Trading Treasury Bonds

Because of last week’s address to Congress by Federal Reserve Chairman Ben Bernanke, the marketplace will be taking an even closer look at any economic news out of the United States. It seems as though the next few weeks of economic data is what the future of Quantitative Easing is hinging on, or at least that is how investors are going to treat it.

In the hours before a $35 Billion Treasury auction of 5 year notes 10 year T-notes rose by over 2 percent, which is their largest jump forward in over a year. This news only solidifies the growing belief that the US economy is doing well enough at this point that Quantitative Easing is no longer necessary. These Treasury Bond numbers are coming in the wake of recently solid economic news out of the United States. Despite this news being almost entirely in support of the end of QE, precious metals are not taking it on the chin, but are rather rolling with the economic punches quite well over the past few days. While not quite there yet, gold has its eyes on the $1,400 mark, which is a  far cry from its near $1,320 low back in April.

Other World News

Some overnight news that is not very surprising is the fact that European stocks were downtrodden a bit in response to worse than expected German employment reports. The OECD expects that Europe will experience a larger than expected contraction in economic growth, perhaps bigger than last year’s.

Asian stocks are back to their old ways and performing well, which is no surprise after how well the US stock markets performed yesterday. Stocks in Asia and the US have been mimicking each other as of late while their currencies are moving inversely from one another.

Looking Ahead

There are a few economic reports being released in the US today, though their effect on the market will be minimal at best. The reports being released to the public today are both the mortgage applications survey and the latest retail sales report.

Trading, especially in the metals market, has been sideways to start today and while gold should be falling steadily, it is putting up quite a bit of resistance.

While many expected gold and silver to remain relatively flat in the early morning hours on Wednesday, they surprised investors by making some solid gains. At around 9 AM gold was up around 17 dollars while silver made gains of a little over 30 cents. Anyone interested in precious metals is anxious at this point as today is the day US Federal Reserve Chairman, Ben Bernanke, addresses congress about the current state of the economy as well as the future of monetary policy in the United States. Reuters reported that gold and silver’s early morning gains on Wednesday were due to strong demand from China, who is the world’s second largest gold consumer after India. 

Ben Bernanke, FOMC Minutes

Two things will catch the eyes and ears of investors today, and those are both Bernanke’s address to Congress as well as the notes from the latest Federal Open Market Committee meeting. Both of these bits of information are expected to shed some light on the future of monetary easing; something that will likely have major implications for the precious metals market.

The popular thought/rumor up to this point is that Ben Bernanke, in his address to Congress, will announce that the Fed plans on winding down the Quantitative Easing program that has been buying millions of dollars in bonds each month over the course of recent history. Now that it seems as though the US economy has regained much of its strength from the monumental economic collapse we saw in 2008, it is thought that the pumping of money into the economy by the Federal Reserve is no longer necessary.

With that being said, there are still plenty of people who think that Bernanke will reaffirm his faith in QE and not announce or unveil any sort of plans to end it. If there is no announcement on the future of QE, and the program remains intact, you can expect this news to be bullish for gold and silver.

Bank of Japan Meeting

On the other side of the world, there was a Bank of Japan meeting which had the chance to impact the metals market, but didn’t. The BOJ announced that their aggressively easy monetary policy that was instituted only a few months ago will remain running strong; news that almost immediately brought down the value of the Yen further.

Other market-relevant news in Asia is the latest bit of manufacturing data out of China. Though it is not expected that this news will have too much of a direct affect on gold and silver, there is always a chance when it comes to China. Moreover, people will be keeping their eyes glued on China in order to determine the current strength of their economy, something that has been called into question lately.

Looking Ahead

As we move into the rest of Wednesday and thus the rest of the week, many of things to look out for will be happening sooner rather than later. Both Bernanke’s speech and the FOMC minutes are expected to be released later this morning, and China’s manufacturing data will come out on Thursday.

This next day and a half or so could have major implications on the spot values of both gold and silver moving forward.

For the third day in a row this week, both gold and silver were losing value before US markets opened. In the early morning hours on Wednesday, silver was down a little over 40 cents while gold was down a few dollars over ten. As investors continue to shy away from precious metals it is no surprise that gold, and most other commodities for that matter, are continuing along their downward trend. As the Japanese Stock Market and the US Dollar continue their moves upward and onward, gold is left on the back-burner for most investors.

EuroZone Issues Continue

While on Tuesday it was reported that industrial output across Europe was up by a margin that had not been seen in over a year, Wednesday brought with it the same old disappointing news that we have come to expect out of Europe. Not only did the euro currency continue to fall in comparison to the USD, GDP for the first quarter of 2013 came in negative.

The first quarter GDP of this year came in at negative .2% when compared to the final quarter of 2012. This news, coupled with a number of other outlying factors, is likely going to push the European Central Bank to stick to its current monetary easing measures.

Though this next bit of news does not necessarily involve the European Union, it is very much a part of Europe. The Bank of England has released an official statement saying that the UK’s economy is in recovery, though the process is likely going to take a bit of time before a full recovery is realized. More currency stimulus is going to be in place in England until their economy is functioning on what they deem to be an appropriate level.

Commodities Being Avoided

As the USD continues to gain value, investors continue to shy away from raw commodities such as gold, silver, and crude oil. While stock markets tend to be filled with high amounts of risk, the Japanese stock market is showing that risk can be mitigated, even if only in the short run.

The Nikkei stock index in Japan has been hitting multi-year highs on a consistent basis lately while the Yen continues to become even more devalued in comparison to the USD. It seems as though Japan’s newly implemented monetary easing measures are working well for the country, but only time will tell if this is going to continue.

Looking Ahead

There is some economic reports out of the US that are set to be released today, but it is not anticipated that they will have too much of an impact on precious metals. Some of the reports set to be released are the MBA Mortgage Applications report, the PPI (Producer Price Index), and Industrial Utilization and Capacity report.

As I write this, gold and silver continue to fall in value which means it is shaping up to be yet another disappointing day for precious metals.