After beginning the day in somewhat impressive fashion, precious metals have since begun conceding value and are just barely clinging on to marginal gains. Today and tomorrow are the biggest days of the week simply due to the amount of economic activity that is going to be taking place. Today will bring about the European Central Bank monthly policy meeting while tomorrow will yield the US monthly employment report for August. Unfortunately for precious metals, this week has so far brought about nothing but added selling pressure.
Apart from the flurry of economic activity the market will also see its attention shift to the ongoing crisis in Eastern Ukraine. Just a few days ago, it was announced that a ceasefire was reached between Ukraine, Russia, and pro-Russian forces. Shortly thereafter, however, it was made clear that these were merely rumors and that no ceasefire agreement was ever officially penned and agreed to. As such, the fighting throughout Eastern Ukraine continue to rage and does not seem to be getting anyone much of anywhere. Though the violence is a good sign for precious metals, the overriding risk-appetite exhibited by investors currently is preventing from metals from gaining much of any foothold.
ECB Meeting Brings About Important Announcement
As soon as US markets opened today, US investors were greeted with some fairly important news from the European Central Bank meeting. According to initial reports, the ECB announced that it would be slashing all interest rates by 10 basis points. This news was not so unexpected, but did cause the value of the Euro currency to sink while simultaneously providing the US Dollar with a bit of a boost. Not only that, but the interest rate cut also prompted both European and US equity markets to shoot upward in value.
Now that this news is currently being digested by the market, the attention of investors from around the world will shift towards tomorrow’s release of the latest US employment figures from August. As it stands, the market is expecting that about 215,000 jobs were added to the economy last month. If these expectations are met or exceeded, it could potentially spell even worse news for precious metals.
Though it is unclear how the duration of the week will pan out, we do know that we are in for quite a bit of economic activity, especially tomorrow. Unfortunately, however, most signs are pointing in the direction of spot gold and silver losing even more value.