Precious metals are ending what has been a fairly dismal week in unimpressive fashion. Both gold and silver spot values declined by a good bit this week, fueled by a stronger US Dollar as well as a lack of any real, noteworthy economic data. As it stands, the weak technical posture of precious metals is not at all being complemented by the bearish nature of the current market. Next week will bring about a good bit more economic activity and data, but not many people are convinced that more data may end up working against metals further.
Geopolitics Make Headlines During Slow Week
As a result of this week’s quiet nature, the attention of investors from around the world shifted towards the ongoing crisis in Ukraine. Instead of focusing on the violence and killing, the world was pleasantly surprised to see that a ceasefire agreement reached between Ukrainian and pro-Russian forces was holding. We are now in the fifth day of that ceasefire and things seem to only be improving with each passing day. For precious metals, however, the lack of violence has stripped away just one more piece of underlying support.
In other news on the geopolitical front, US president Barack Obama used Wednesday evening as a means of announcing what he and the US’ allies plan on doing in order to combat the growing threat posed by ISIS militants. In a prepared speech, the US president announced that he and his military would be increasing airstrikes against ISIS targets. This announcement was more or less expected by the marketplace and did not have any major impact on spot values or the US Dollar. What is worth mentioning, however, is the fact that Russian president Vladimir Putin announced that any US airstrike in Syria would be perceived as a strike against Russia itself. With the US fully intending to strike ISIS targets within Syria, it will definitely be interesting to see how this situation plays out over the coming days and weeks.
Focus of Market Shifts Towards Busy Next Week
As a result of this week being so incredibly quiet, investors from around the world are turning their focus towards next week’s Federal Open Market Committee (FOMC) policy meeting. The reason next week’s FOMC meeting is of such importance is due to the talking points the market is expecting to hear be discussed. For one, it is likely that the FOMC will discuss, in some detail, how they envision the market will fare as Quantitative Easing is completely done away with over the next month or so. In addition to this, investors will be hoping to be dealt some resemblance of a timeline with regard to when and by how much interest rates in the US will be raised.
The market’s current uncertainty with regard to interest rates being risen is breeding most of the sideways movement we are witnessing on the part of US equities. With no one really sure when interest rates will be risen, investors are simply holding their positions and waiting it out. That much has been seen this week in the subdued nature of trading both in the US and around the world.