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June 4th Early Week Silver Market Update

Gold and silver did a good job of losing most of Monday's gains in the initial hours of trading Tuesday as the USD rebounded from significant losses on Monday. Gold was able to get its head a good bit above the $1,400 threshold yesterday, but that was a short-lived victory as it took barely over 12 hours to move right back down into the $1,390s. While we have seen Japanese stocks suffer a bit over the course of the past week or so, they rebounded by a decent margin on Tuesday which also put some downward pressure on precious metals. Despite Japanese stocks doing better on the second day of this week, Chinese stocks were still suffering from the mixed-bag of economic news they announced this past weekend.

OECD Brings Good News

The Organization for Economic Cooperation and Development announced that the globe's developed countries saw their Consumer Price Index rise by only 1.3% in April. This is compared to an annual increase of 1.6% this past March. While April's worldwide CPI numbers trump that of March's, it is the general consensus that any annual rise under 2% is what most would consider to be normal.

Because inflation did not rise too dramatically over the course of the past 2 or so months, this will likely cause central banks of the world to be convinced that it is necessary to continue the easy money policies we have seen so much of lately. With that being said, I would still expect the US to wind down their Quantitative Easing program this summer, despite incredibly low inflation rates.

Europe, the US

It seems as though Europe is never done emitting bad news, and Tuesday was no different than what we have seen over the course of the past few weeks. The EU reported that producer prices fell by over half of a percentage point this past April, the largest such decline in 4 years. This will increase the level of anticipation for the European Central Bank meeting that is going to be held on Thursday.

On Tuesday there are two economic reports that market watchers and investors will be keeping their eyes on. The two reports expected to be heard on Tuesday are both the retail sales report and trade deficit report. While we are not expecting any earth-shattering news from the two reports, they always stand a chance to move precious metals in either direction.

As we stated before, there is a European Central Bank meeting on Thursday and it will be hawked over with heavy scrutiny. The entire eurozone is in disarray and has been for some time and no countries have stepped forward with any real solutions to the growing economic problems. In addition to the ECB meeting on Thursday, investors and market watchers will be anxiously awaiting a US unemployment report set for Friday.


Posted in Market Updates

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