Gold and silver investors will like to quickly forget the past 5 days as they have done nothing but pile on more losses for spot values. Though this was not the most eventful week from an economic data standpoint, the marketplace did have plenty of information to mull over and consider through this week’s trading session.
As it stands, both gold and silver are feeling heavy pressure from a number of different factors, including weaker crude oil prices and a more hawkish attitude regarding interest rate hikes in the US. Quite frankly, a lack of fundamentally bullish news is likely to continue affecting spot values negatively.
Greece, Creditors Reach Bailout Deal
Despite last week yielding a referendum vote result which saw Greek citizens starkly opposed to austerity measures, the opening day of this week brought with it news of a deal being reached between Greece and its IMF/EU creditors. Though the deal was reached on Monday, it wasn’t until Wednesday when the Greek parliament was to vote on whether to accept the bailout deal. Simply, the bailout deal sees Greece subjected to harsh austerity measures in exchange for life-saving financial assistance.
The result of the vote saw Greece’s parliament overwhelmingly accept the deal, and now Greece’s financial problems have been moved to the back-burner of the marketplace’s attention. News of the deal helped strengthen stock markets in the US and Europe; something that did not do metals any favors at all.
Yellen More Hawkish on Rate Hikes
Fed Chair Janet Yellen spoke to Congress this week, and what she had to say caught the attention of investors both at home and abroad. In a prepared speech earlier this week, Ms. Yellen made it clear that the US economy is, in fact, ready to take on higher interest rates before year’s end. Up to this point, there was a bit of a divide amongst investors, with some thinking rate hikes will happen after the New Year, and others thinking they were an inevitability before year’s end.
Now, the market can say with certainty that interest rates will be on the rise before the end of 2015. With all of this said, however, it still remain quite difficult for one to pinpoint exactly when these rate hikes will go into effect. I am expecting the first hike to take place at some point during the Fall, but there is little concrete evidence to back up this claim. Once again, however, this news weighed on precious metals spot values considerably as investors seek interest-bearing assets as opposed to safe-haven precious metals.
Iran Nuclear Deal Drives Oil Downward
After years and years of negotiations, Iran and Western powers have agreed to a nuclear deal which will see economic sanctions lifted in exchange for control over Iran’s nuclear ambitions. Though Iran has always said its pursuit of nuclear energy is strictly for nuclear power, many in the West have long feared that this was simply a cover-up for more dire intentions.
Now that the deal is passed, a host of Western-imposed sanctions will be lifted. One of the biggest possibilities stemming from the lifting of sanctions is that Iranian crude oil, which has been banned across Europe and most of the Americas, will finally be available for purchase. Being that the crude oil supply is already glutted, the possibility for more oil on the market has actively been driving prices downward this week. This is yet one more factor that is working against precious metals, something that is seen in this week’s consistent decline. As we look ahead to the week to come, it will be truly interesting if we receive any news capable of lifting spot values by any amount.