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June 3rd Early Week Silver Market Update

Gold and silver are stronger on Tuesday, but they are not making anything in the way of progress. While bargain-hunting buying has made an appearance in the early morning hours today, the bears are still very much in control of the market. This week is scheduled to emit a large quantity of worldwide economic data, most of which is expected to put even more downward pressure on precious metals.

The marquis event of the week is without a doubt the European Central Bank's monthly policy meeting, scheduled for Thursday. At this point, the expected outcome of the meeting is one that will more than likely weigh heavily upon both precious metals and the euro currency. Recently, the euro has been under plenty of pressure as a result of speculation with regard to the outcome of this week's meeting.

European Central Bank Meeting Top Priority For Investors

Ever since the middle of last week, investors have either been ridding themselves of safe-haven assets or simply holding their current positions. The reason for this is due to the simple fact that much of the marketplace believes that we will hear of future monetary stimulus plans from the European Central Bank. Deflation, among other factors, has been a cause for concern over the past year or more in Europe, and many people believe something needs to be done, and soon.

Just today it was reported that annual inflation in the EU was up by only .5% in May. This was the lowest such inflation reading in nearly 5 years and fell short of market expectations for a .7% year on year increase. This data only serves to add more credence to the widespread belief that the ECB will soon implement some sort of monetary stimulus measures. If new stimulus is put into action, it will more than likely deal another heavy blow to the euro currency, which has recently been trading down against the US Dollar.

What does this mean for precious metals? Well, the overriding belief is that a weaker euro currency will translate into a significantly stronger US Dollar. If the Dollar improves upon its current standing, there is non denying that the likely outcome will be an even weaker precious metals market. Over the last month or so, the USD index has seen the greenback on a more or less steady trajectory upward. Now that safe-haven demand stemming from the crisis in Ukraine is no longer a factor, the surging Dollar has finally been able to have a real impact on the spot values of precious metals. To be completely honest, the next few weeks are shaping up like they will be particularly hard on gold and silver. With that said, however, anything is possible as the Chinese economy has been showing recent signs of improvement and the crisis in Ukraine is still far from resolved.

Posted in Market Updates

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