After declining slightly on Wednesday due to profit-taking, both gold and silver are in stronger positions today. In addition to profit-taking driving spot values down a day ago, a strong economic report from the United States gave strength to the US Dollar and added to the pressure being levied against gold and silver. The report showed that sales of new homes rose in January at the highest rate in nearly 5 years. This news strengthened the USD and ended up driving the spot values of gold and silver down even further than what profit-taking alone has done.
It is clear that precious metals still have the technical momentum, though that may change depending on what Janet Yellen has to say to the US Senate Banking Committee today. Though it was originally scheduled for a few weeks ago, today’s address was rescheduled due to the slew of winter storms that troubled the entire eastern seaboard.
Yellen’s Address on the Economy
As is always the case when the chairperson of the Fed makes a speech, the entire marketplace will be paying close attention to Ms. Yellen’s address to the Senate’s banking committee. Her speech will revolve around the current state of the US economy as well as the Fed’s plans with regard to continuing tapering or not. As of late, a majority of economic data out of the United States has been sub-par and worse than market expectations. Though the Fed has already stated that a temporary bad run of form is not enough to undo the plans to taper, many investors are convinced that the FOMC will refrain from tapering at their upcoming meeting.
With this being said, however, it is more likely that Yellen will reiterate her positive outlook on the US economy as opposed to offering any definitive details with regard to future tapering plans. If the FOMC does plan on increasing tapering, this could potentially spell bad news for precious metals.
In other news, the civil unrest in Ukraine and Thailand is still making headlines. Though the violence in both countries has since become less severe than it was last week and over the weekend, investors from around the world are not concerning themselves with how Thailand and Ukraine’s financial systems will be able to survive this turmoil. The EU gave Ukraine some money yesterday in order to help keep their economy afloat, but it is going to take more than that to see Ukraine through this period of civil unrest. As the civil unrest continues, precious metals investors will be paying attention as any and all happenings will undoubtedly have some sort of impact on the market.