As of the writing of this post mid-morning Tuesday, metals are suffering significant losses and not looking like the day will get any better. This week, though slow, has seen the attention of investors drawn to a few different situations, most of which are unfolding across Europe. For today, the bulk of global investors are focusing on ongoing negotiations happening between the Greek government and European Union finance officials. Also happening in Europe is a ceasefire between Ukrainian military forces and pro-Russian separatists that was reached last week.
Focus on Greece Austerity and Debt Reduction Measures
Because this week is mostly lacking from an economic data standpoint, the market has found time to focus on some other unfolding issues, including the ongoing talks between Greek government officials and European Union finance ministers. In case you haven’t been paying attention, Greece’s new government is almost entirely opposed to previously agreed upon debt reduction and austerity measures. These measures were agreed upon back in 2012 as a pre-requisite for the EU to give Greece a slew of bailout money.
At present, the ongoing financial talks have yielded a stalemate between Greece and the EU. The reason for this is because the EU, namely Germany, are taking a hardline stance on Greece’s opposition. If Greece continues to be obstinate, the country may soon face a credit crunch that runs the risk of pushing Greece out of the EU. This is such a problem because if Greece leaves the EU, some fear that other smaller EU nations may do exactly the same thing. If all of this unfolds as poorly as it could, it may create a sense of uncertainty enough to drive some more interest back to the precious metals market. For now, however, stocks are actively taking away buying interest from gold and silver.
Equity markets across the EU and the United States have been trending higher for the better part of the past two weeks and are now sitting at or near multi-year highs. If this uptrend continues, you can bet that precious metals will continue to suffer.