Precious metals finished out the week poorly, but through the first three and a half days enough gains were made for this 5-day trading session to be considered a success. To be fair, there wasn’t an overload of economic data offered up this week, but a good bit of stories surfaced that may affect the global marketplace a bit further down the road. A major headline this week was the FOMC’s convening for their monthly policy meeting, but that meeting ended up being more lackluster than anything else.
As we head into the first week of February trading, it will be interesting to see if gold and silver can continue to capitalize on the uncertainty currently held by such an overwhelming number of investors.
Safe-Haven Demand Drives Precious Metals
Throughout much of the first half of this week, precious metals spot values were on the rise thanks, largely, to the growing sense of uncertainty being exhibited by global investors. As equity markets across Europe, Asia, and the Americas continue to tumble, and 2016 economic growth expectations get downgraded, investors are realizing the need to safeguard their wealth, and are doing that with gold and silver.
Towards the end of the week, both gold and silver suffered some minor losses, but these were due more to profit-taking and chart consolidation than anything else.
FOMC Meeting Brings No Change
Though it is typically big news, this week’s installment of the Federal Open Market Committee meeting largely flew under the radar. The reason for this is perhaps due to the fact that no one was expecting anything to come from this meeting. While at one point there may have been expectations that the Fed would raise interest rates yet again, that much did not prove to be the case.
In fact, the Fed hinted that it may be quite some time before rates are raised again. In a statement made after the meeting, the Fed said that current, uncertain market conditions were to blame for the lack of rates being raised. With so many people expecting this poor market atmosphere to carry on through the next few weeks, and maybe even next few months, there isn’t exactly a plethora of people who are expecting rates to be raised again at March’s meeting either.
OPEC Meeting in the Cards
A rumor that surfaced towards the end of the week was that OPEC member nations were going to soon meet in order to talk about what can be done to combat the falling price of crude oil. Up to this point, calls for countries to limit their production have gone ignored, so it is interesting to see OPEC pursue the same tactics this time around.
Making things a bit more interesting, however, is the fact that Russia is supposedly in talks with countries like Saudi Arabia and Kuwait about possibly joining them in curbing the production of crude oil. Though these talks have fine intentions, the fact that Iranian crude oil may become a bigger player in the global crude oil market is something that may undermine any decisions made by OPEC countries. As of now, there is no date set for these rumored OPEC talks.
In other news on Friday, the Bank of Japan announced that, effective February 16th, the country would be subjected to a negative .1% deposit rate. This move was made in an effort to drive up inflation despite falling crude oil prices working to do the exact opposite. In addition to this announcement, the BoJ made it clear that they are not counting out the possibility of venturing further into negative territory as far as interest rates are concerned. Aiming to reach a 2% inflation rate, Japan is currently far from that goal at the present moment in time.