Gold and silver spot values are trending down as of the writing of this post, but began the day moving upward in the lead-up to the FOMC meeting. This week is going to be quiet from an economic data standpoint, but with the FOMC meeting taking place over the course of today and tomorrow, investors will have plenty of information to mull over and discuss.
As has been the case for the past few weeks or so, the market is wholly preoccupied with the spot value movement of crude oil. In addition to this, recent volatility on the part of global equity markets has caused investors to wonder what the future holds for their stock market investments. Last week, for instance, increased worries with regard to a global economic slowdown helped prop up gold and silver spot values, causing both of the aforementioned metals to make nice weekly gains. This week, however, we have seen much of last week's gains be consolidated as metals look ready for another move down below key technical points.
FOMC Meeting Takes Center Stage
The Federal Open Market Committee is the body tasked with the alteration and upkeep of monetary policy in the United States. In recent months, the FOMC has been the center of investor attention due to the fact that it is widely expected that they will decided to raise interest rates in the US for the first time in quite a few years. Though the market has anticipated interest rate hikes for some time now, it is still unknown when exactly these hikes will take place. At this week's meeting, however, most investors are hoping that will change as it is widely expected that the Fed will make an announcement regarding when interest rates will be hiked.
For gold and silver, increased interest rates will make for a market that is more concerned with interest-bearing assets than those, like precious metals, that are used much more readily as a defense against uncertain economic times. As such, there are a number of people who believe that the official announcement regarding interest rate hikes will cause spot values to come tumbling. In reality, however, I am of the belief that, if interest rate hikes are announced, they will not have too much of a negative impact on the spot values of gold and silver.
The reason for this is simple, because investors have had months to plan for raised interest rates in the United States, it will not come as much of a surprise when interest rate hikes are actually announced. Just like it was with the ending of Quantitative Easing, the fact that it was coming meant that investors were much less surprised when it happened. Still, it will be important to monitor anything and everything the Fed has to say in the wake of their meeting tomorrow afternoon. As you can plainly see, the FOMC meeting is consuming headlines this week.