Gold and silver saw very little movement on Monday, but that all changed in the overnight, early morning hours on Tuesday. A decrease in interest rates in Australia is part of the reason why gold and silver dropped a decent amount before US market even opened on Tuesday. Gold had no problem moving back over the $1,400 threshold after its collapse the other week but now it is facing some resistance as it approaches $1,500. After taking a week off to celebrate a holiday, the Japanese stock market hit a 5 year high. It seems as though everything has been going right for Japan ever since its Central Bank announced their aggressive monetary easing policy.
Australian Interest Rates Cut
Part of the reason why gold fell in the overnight hours was due to Australia cutting its main interest rate to its lowest point in years, 2.75%. This is a preventative measure to keep their economy's head above water as well as to weaken their currency; like most other major countries around the world have been doing. While this interest rate cut has initially hurt the price of gold and silver, the long-term implications are positive because any time a currency is weakened and there is more of the paper money floating around in the open market, gold and silver tend to react positively.
Asian Markets Surging
Japanese traders and investors took all of last week off in order to celebrate a holiday known as the Golden Week, and though you might expect a slow start to this week, the opposite occurred. Instead of having a slow, stagnant Monday like gold and silver did, Japanese stock markets hit multi-year highs.
People will have their eyes on China tomorrow and Thursday as crucial economic reports are set to be released to the public. It is unlikely that these reports will be too positive because recent history has shown us that the Chinese economy is not doing as well as it has been in the past few years.
Physical demand for gold is going to be high all week in India as many are prepping to celebrate the Akshaya Trithiya holiday which is less than a week away. Indians, and most of Asia for that matter, are well-known for giving gold and silver as gifts for special holidays such as the one we just saw Japan celebrate and the holiday quickly approaching for Indians.
Key US Reports Upcoming
If you are at all interested in investing in gold or silver it goes without saying that you will need to pay close attention to things going on in the US market. This week is quite a busy one as there are a number of key reports set to be released this week including a retail sales report, global Purchasing Managers' Index, and a consumer credit report. Luckily for gold and silver investors the USD was down a bit in the early morning hours on Tuesday, otherwise gold and silver's overnight decline might have been a bit more drastic.