Gold and silver have done little else apart from falling in value over the last few days, and have since fallen below important thresholds. Currently, spot gold is sitting below the $1,300 threshold while silver fell below $20/ounce a few days ago and has continued to decline. Hurting precious metals more than anything else is the fact that there have been very few pieces of new bullish developments this week. While there has been some US economic data, most of it failed to have any real impact on the marketplace.
The situation in Ukraine has since faded entirely to the background and is of little interest to investors now. With that being said, even the smallest flare up in violence in the region will put safe-haven demand for precious metals back on an upward path.
Lack of Fundamental Inputs Drives Gold, Silver Downward
What little economic and geopolitical developments made headlines this week ended up having no real impact on the spot values of metals. Earlier in the week, the market was greeted with a slew of US housing data, of which was mixed in nature. This news didn’t move metals in either direction, but it did give the US Dollar a bit of a boost. The Dollar has since grown more valuable and is a contributing factor in precious metals’ declines over the past week or so.
Adding to the pressure being placed on spot gold and silver was a report that Barclays revised their forecast for the spot value of gold at year’s end. Compared to their original forecast of $1,205, Barclays now expects spot gold to be somewhere in the neighborhood of $1,250 by the end of the year. On its face, this seems like good news for gold, but in reality the fact that their revised forecast still sees gold below its current spot value is an underlying bearish near-term factor for metals.
Finally, investors are still concerning themselves with statements made by chair of the Fed Janet Yellen last week. While talking to the media Ms. Yellen made it clear that she expects QE to be completely eliminated by the end of the year and that interest rates might be risen as early as next spring. This gave the greenback yet another boost and put more downward pressure on precious metals. Now, the hope is that gold and silver can halt their decline and get back on track either tomorrow or early next week.