Gold and silver posted losses for a majority of the beginning of this week as well as the whole of last week. With a recent run of strong economic data out of the US and last week’s ECB meeting driving up the value of the US Dollar, gold and silver have had a tough go of things recently.
However, today some comments were made by a favorite for the Federal Reserve chair position; comments which made investors rethink their confidence with regard to the tapering of QE before the end of the year.
Prospective Fed Chair Comments
Janet Yellen is being touted as the favorite to replace Ben Bernanke as Federal Reserve Chairperson. Yesterday she appeared before the US Senate Banking Committee and delivered prepared comments about monetary policy in the US and what she would do if given the position of Federal Reserve chairwoman.
In her comments, Yellen stated that she thinks accommodating monetary policy needs to be retained in the United States. Her reasoning was simple, the US economy is simply not performing at a high enough level to merit a cutting back of Quantitative Easing. These comments flew directly in the face of those investors who, up until yesterday, were holding on firmly to the belief that QE may still be tapered before the end of the year.
Today, during questioning by US senators, Yellen once again reiterated her position regarding monetary policy. With the retention of QE, Yellen hopes to see unemployment decline even further. She also hopes that keeping QE around will continue to help boost the US economy’s standing. Ms. Yellen’s remarks both yesterday and today were positive for precious metals, which made gains for the first time in over a week; solid gains too.
EU third quarter GDP was reported as being up by almost a half percentage point, though this mark was a bit lower than market expectations. Second quarter GDP in Europe improved by over a whole percentage on an annual basis which makes this latest reading especially poor. The disappointing GDP data from Europe makes the ECB’s decision last week seem like the perfect move to make.