Precious metals are losing a lot of value as of midday on Thursday, thanks to an increased risk-on attitude as well as improving equity markets around the world. Despite continued attention being placed on the number of geopolitical flashpoints from around the world, these are doing more in the way of limiting selling pressure than they are fueling safe-haven purchases. As we head into the final day of the week, it will be interesting to see if precious metals can recover from today’s losses or if things will continue in the direction they have gone for a majority of this week.
Geopolitics Remain Focal Point of Market’s Attention
For the last 2+ weeks, investors the world over have been paying extremely close attention to a number of developing geopolitical incidents. Israel’s bombardment of Gaza, Russian-Ukrainian tensions on the rise, and today’s crashing of a passenger flight over Western Africa are all preoccupying investors to some extent. However, unlike last week, the continued focus on geopolitical happenings has not really translated to an increased interest in precious metals. In fact, this week has seen risk-appetite steadily creep its way back into the market.
In fact, just today, a positive preliminary PMI reading from China in July has caused most Asian equity markets to shoot upward. What’s more, US equity markets have traded upward for a majority of the week and are continuing to do so today. On top of all this, the US Dollar has also been seen making gains against the euro as a direct result of looser monetary policies across the EU. Preliminary forecasts hold that the euro currency will continue declining throughout the remainder of the year.
Unfortunately for precious metals, it seems as though market bears have effectively taken control of the marketplace. With equity markets doing so well despite all this turmoil, investors are remaining cautious, but realistic with regard to their investing decisions. So long as US equity markets, treasuries, and the USD remain as valuable as they currently are, it is fairly easy to see why gold and silver may have a rough few weeks ahead of them.
During the last day of the week i expect the market to remain relatively quiet as investors await answers with regard to what happened to the Air Algerie flight that crashed earlier this morning in Africa. While no foul play is expected just yet, the fact that the flight was cruising over a warzone leaves this crash shrouded with suspicion-at least for now.