Some chart consolidation and short-covering by investors is currently helping gold and silver retain marginal early morning gains. Despite spot values being only marginally higher now than they were when markets opened, it is encouraging to see metals not being pressured by the currently strong US Dollar. This week, unlike last week, is not expected to bring about much of any important economic data and will probably see gold and silver having a tough time moving too far in any direction.
Currently, higher crude oil prices are helping precious metals offset the downward pressure being levied against gold and silver spot values by the surging US Dollar. This is now the second consecutive day where crude oil prices edged higher.
Light Economic Week, Italian Bond Yield Worries
As was stated previously, this week will not be bringing about much in the way of important economic data. While there will be some reports stemming from the Chinese economy, most of them will have only a minor impact on the spot values of precious metals. In the United States, investors will only be concerning themselves with Thursday's release of the latest weekly jobless claims. With nothing too important to latch on to this week, the interest and concern of investors is bouncing from issue to issue.
Most recently this morning, it was announced that Italian 10-year government bond yields had fallen below those of US 10-year government bonds. The declining yields of Italian bonds makes sense once you take into consideration the ECB's decision last week to introduce monetary stimulus as well as a negative deposit rate. With more euros being pumped into the EU economy and saving more or less discouraged, it should come as no surprise that bond yields have fallen well below what most would consider to be "normal" yields.
While worries with regard to deflation have been plaguing Europe for a few years now, early signs are indicating that the new stimulus measures being pursued by the ECB may bring about inflation, the likes of which haven't been experienced by Europe for more than a half century. This is by no means a guarantee, but it is definitely something to consider as investors and European banks alike continue to gobble up Italian government bonds.