Precious metals spot values have bounced back a bit as of this morning thanks to some short-covering and bargain-hunting after prices dipped considerably towards the end of last week. Unfortunately, this week is not expected to bring about a large number of economic reports considering we are still in the midst of a month known for being all about vacation.
Still, the market will find ways to preoccupy itself by mulling over last week's central bankers confab in Jackson Hole, Wyoming, and speculating with regard to the future of monetary policy in the EU and the United States.
Interest Rate Speculation Continues
In case you missed it, the relatively quiet market atmosphere last week was not without its noteworthy moments. Most noteworthy of all was the global central bankers meeting that was held in Jackson Hole, Wyoming towards the end of last week. European Central Bank president Mario Draghi as well as Federal Reserve chairperson Janet Yellen were in attendance and both made prepared speeches. Janet Yellen emphasized her belief that the US economy was definitely on its way to recovery, but also noted that there is still significant improvement needed to be made before rates are increased.
Draghi, on the other hand, alluded that the ECB is ready to initiate more monetary stimulus in order to aid an EU economy that has been performing sub-optimally as of late. Should the ECB follow through with even looser monetary policy measures, there is a strong likelihood that the value of the Euro currency will decline even further than it already has. What's more, raised interest rates in the United States would give the greenback a significant boost. Though none of these policy shifts have actually taken place yet, it has not stopped investors from speculating. You can expect that same speculation to continue into this week simply because there isn't too much else for the investing world to become preoccupied with.
There are still a large number of ongoing geopolitical events worthy of the market's attention, but they are mostly being ignored. Things like the ongoing Israeli offensive in Gaza and increased violence between Ukrainian military forces and pro-Russian rebels have been in and out of the news all summer, but for now the market simple isn't interested.
Precious metals were able to bounce back today, but with the USD index continuing to gain momentum and US equities still in a strong position, there is not too much room for them to move beyond where they are at present. Currently, gold is still sitting more than ten dollars below $1,300/ounce while silver is sitting a few cents below $20/ounce.