After gold and silver rode a nice rally on Monday to over $1,200/oz and approaching $17/ounce, prices are backing down as of the writing of this post. Today's early downward price movement is, in all likelihood, the product of chart consolidation and profit-taking after yesterday's gains. In case you are unaware, the week ahead has a lot in store and will likely see the activity level of the global marketplace pick up considerably before things are all said and done. While there are numerous pieces of data the market is set to be made aware of, few events this week are catching more attention than Thursday's European Central Bank policy meeting.
As it stands, there are a lot of investors who think that some sort of shift in policy will come as a result of this week's meeting, and that is very noteworthy for a number of reasons. In addition to the ECB meeting, investors will also be paying close attention to the chart movement of both the Dollar, which has come under pressure recently, and crude oil, which recovered yesterday, but is still in a none too favorable position.
Dollar Back Up, Crude Oil Down
The early parts of Tuesday are shaping up in stark contrast to what we were witnessing a day ago. Unlike on Monday, the price of crude oil is heading back downwards while the US Dollar is trying to recover after a few days' worth of losses. In fact, the Dollar's recent price action has been so worrisome that some market analysts speculated that perhaps too many people bought too many US Dollars too quickly and that the market was preparing to reset itself lower.
While today's gains do not necessarily disprove that hypothesis, it certainly causes one to wonder how ready the greenback is to tick downward. Of course, we will continue to keep an eye on all global currency markets as the week plays out in order to see exactly where the Dollar ends up by week's end.
ECB Meeting Takes Center Stage
Ever since Mario Draghi made comments with regard to quantitative easing measures still being in the cards for Europe, the world began becoming anxious for the next ECB meeting. Well, the meeting is scheduled to take place on Thursday and it is already the primary concern for many global investors.
At this juncture, most people are anticipating that the ECB, on Thursday, will announce some sort of quantitative easing, government bond-buying initiative to be implemented quite soon. If this does prove to be the case, you can expect that the Euro will decline in value and that the US Dollar will likely appreciate. Though there is no saying this for certain, this is what most people expect to happen should QE measures be introduced. Regardless of what we think might happen, it is a certainty that Thursday's European Central Bank meeting is the week's marquis event.
On Monday, there was some downbeat manufacturing data from the United States as well as a report saying that the Black Friday weekend was significantly weaker this year than last year. This news has preliminarily hurt US stocks and very well might continue to do so as the week wears on and Cyber Monday sales reports are made public.