After more than a week of consistent losses, gold and silver finally turned things around on Thursday thanks to a Federal Reserve chairman nominee’s statement made yesterday. Prior to today, robust economic data out of the US as well as the declining value of the euro currency were putting heavy downward pressure on gold and silver.
Though gold nor silver have made up for this past week’s losses, gains made early on Thursday are definitely a start.
Janet Yellen’s Remarks
Though most people have no idea who Janet Yellen is, she is becoming more important as each day passes as she is one of the nominees for Ben Bernanke’s position of Federal Reserve chairman. Yesterday, Yellen was scheduled to give testimony to the US Senate Banking Committee with regard to her plans if and when she is appointed fed chairperson.
Yellen stated that if she were appointed chairwoman, she would likely continue with Ben Bernanke’s policy of Quantitative Easing. She feel’s as though more economic stimulus is needed in order to push the US economy towards reaching its full potential. This news was welcomed with open arms by investors who have been looking for anything to shed a positive light on precious metals. Though Yellen’s comments were made on Wednesday, they were made so late in the day that the marketplace did not begin to digest them until today. It will be interesting to see how the outlook on QE tapering will change (if it will change at all) in the extended wake of Yellen’s statement.
Weaker EU Economic Data
In news out of the European Union, 3rd quarter GDP grew by only .4%. This was seen as weak news because the .4% increase was down almost a whole percentage point from the 2nd quarter’s 1.2% increase. This marginal GDP increase makes many believe that the EU’s decision to cut its lending rate was more then merited.
With deflation a focal point of most investors’ discussions nowadays, possible deflationary scenarios may see tapering of QE pushed back even further. This is coming only a day after the widely held belief that QE would be tapered sooner rather than later.
An improved Japanese GDP reading helped boost Japanese stocks, though it did not have much of an impact on precious metals.