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January 21st Early Week Silver Market Update

Gold and silver are retreating a bit on Tuesday thanks to some technical selling after hitting a 5-week high overnight. Americans are back on the trading bloc today after having the day off yesterday to celebrate the Martin Luther King holiday. A stronger US Dollar is putting some decent downward pressure on gold and silver and is also to blame for today's losses.

Despite gold and silver finishing down on the day, both metals ended the day up from daily lows.

Investors Anxiously Awaiting Next Week's FOMC Meeting

Due to a lack of fundamental inputs, investors are and have been anxiously awaiting next week's Federal Reserve policy meeting. Thanks to a somewhat recent decision to taper Quantitative Easing by $10 billion monthly as well as recently strong economic data most market analysts are seeing no real reason to retain the easy money policies we have become accustomed to. To that end, last week it was reported that two voting members of the Fed want to see QE completely done away with by the end of this year. Though last week's report only keyed on two voting members, there is a strong likelihood that those sentiments are echoed by other voting members as well.

With the possibility of QE being reduced next week in the cards, speculation with regard to this matter will be putting downward pressure on precious metals.

In other news from around the world, the annual economic and financial forum is being held this week in Switzerland. As of now this meeting is not looking like it will be a big market-mover, but the past shows us that anything is possible at meetings of this nature. The forum will feature a boatload of speakers who are attempting to push their economic and financial ideologies on those in attendance.

In an effort to combat rising short-term interest rates the Chinese Central Bank injected monetary stimulus into the Asia's largest economy. This move was also made to help accommodate the cash needs of Chinese citizens in the lead-up to the Lunar New Year. The Chinese Lunar New Year is also being credited as a major reason behind why physical demand for precious metals is so high currently.

Posted in Market Updates

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