Precious metals have had an interesting week up to this point, and despite gains made on Friday, they are looking like they will be posting a weekly loss. As it stands, the overall market attitude towards gold and silver is far more bearish than most people were anticipating a few weeks ago. Now, because interest rate hike talks are back on the table, investor interest in safe-haven gold and silver is a mere shadow of what it was a few weeks ago.
With that said, however, the ongoing Greek debt negotiations have helped keep metals afloat by injecting a good amount of safe-haven demand into the marketplace. These negotiations will carry on into and through the weekend, with a deal supposedly within reach.
Interest Rate Hikes Expected Yet Again
If you can think back to about two weeks ago, the general consensus was that the Federal Reserve of the United States was going to hold off on hiking interest rates during 2015. Citing slower than anticipated economic growth and a host of other factors, the Fed made it clear that, while they are undecided, they are not eager to make a rate hike solely for the sake of a rate hike.
Now, with more recent economic data being on the positive side of things, market experts have come out this week saying that they think a Summer 2015 rate hike is in the cards. Citing a speech by Janet Yellen made last week where she alluded that rate hikes were just around the corner, investors are slowly but surely become re-convinced that rate hikes are an inevitability.
Due to this slow growing belief, gold and silver spot values have suffered as investors ditch safe-haven assets in search of more risk and more potential reward elsewhere. So long as the market continues to think rate hikes will be happening soon, I do not foresee much changing for gold nor silver.
Greek Debt Negotiations Seeing Limited Progress
For the better part of the last two months, Greece has been in and out of the headlines, almost always because of their current financial situation. After having made an announcement earlier this week that they do not have enough funds to pay in full their next loan repayment, Greece is seeming to be stuck between a rock and a hard place.
Just yesterday, however, new reports streamed in claiming that a deal between Greek and IMF/EU negotiators very well might be reached by this Sunday. The timing of this potential deal could not be any more crucial as, only a few weeks ago, Greece’s prime minister made it clear that a deal needs to be struck before the end of May, lest Greece’s days as a member of the EU may be numbered.
Though it isn’t set in stone, the general belief is that, if Greece is unable to make loan repayments, they will be forced out of the European Union. This is a situation no one in Europe wants to face, and is something that has been weighing on financial markets recently. European equities as well as the Euro currency have performed poorly throughout the last two weeks, which has given the Dollar plenty of room to move forward. As we look ahead to what next week might hold, I am certain that all eyes will continue to be fixated upon Greece and their debt problems. With some luck, however, a permanent, effective deal will be reached by the end of this weekend, though I am not holding my breath.