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January 28th Early Week Silver Market Update

Gold and silver posted decent losses for the second consecutive day after gold hist a 9-month high in the early morning hours of Monday. A technical correction after gold and silver made some substantial gains over the past few days is to blame for their recent slide. Contrary to what was the case a day ago, the global marketplace seems to have calmed down and stabilized a bit. The FOMC monthly policy meeting got underway today and is expected to wrap up sometime tomorrow afternoon. The outcome of today and tomorrow's meeting will directly affect how markets act for the rest of the week.

All Eyes on the FOMC…Again

The body of the Federal Reserve in charge of dictating monetary policy, the Federal Open Market Committee, convened today for their monthly meeting. Despite the fact that the investing world always seems to pay attention to the FOMC and their meetings, this one is of utmost importance for the sole possibility that Quantitative Easing may be tapered even further. If you can recall, the FOMC first decided to taper its monthly bond-buying policy by $10 billion this past December. Now, with bond purchases in the neighborhood of $75 billion per month, many believe that we are on the verge of seeing yet another $10 billion reduction. Not everyone is under the impression that the Fed will further cut back on its easy money policy, but it seems as though a majority of people are coming to terms with this very real possibility.

A number of periphery currencies are threatened by the possibility of this move and reacted by being the victims of heavy selling pressure yesterday. Things have since corrected themselves a bit, but the ever looming possibility of less easy money in the marketplace is causing investors to lose their appetite for risk. The pressure on periphery currencies is only compounded by recently weaker than expected Chinese economic data. Over the course of the past few months the largest country in Asia is showing clear signs of a slowdown in economic growth. With that being said, however, it is worth mentioning that even though the Chinese economy's strength is being called into question it is still performing at a higher level than most other world economies.

Posted in Market Updates

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