Gold and silver are trading down on Thursday thanks to a lack of any fresh bullish news. As it stands, gold has fallen below the $1,300 mark and is continuing to decline as the day wears on. Spot silver has already fallen below the $20 threshold earlier this week and is continuing to decline in value. The overall outlook on metals has grown considerably bleaker than what it was barely more than a week ago.
Today, the IMF agreed on a $14-$18 billion aid package for Ukraine that is expected to grow in value within the next two years. The package has been approved in order to help Ukraine avoid default amid their ongoing political instability. Meanwhile, the EU and the United States continue to place sanctions on Russia and top Russian officials in a punitive effort to reprimand the Kremlin for annexing Crimea.
Lack of Bullish News Hurting Precious Metals
From an economic and geopolitical standpoint, this week has thus far been quiet. There was some US housing data released on Tuesday, but it really had no major impact on the marketplace. If anything, the economic data was a bearish for gold and silver. As a result of the lack of economic data, the investing world has been concerning themselves with the interpretation of Janet Yellen’s comments last week.
While speaking to the media, Ms. Yellen made it clear that QE would like be done away with by the end of the year and that interest rates in the United States might be risen as early as next spring. This news was good for the US Dollar and in turn put even more downward pressure on precious metals. St. Louis Federal Reserve bank president James Bullard reiterated Yellen’s comments earlier this week by saying that he sees the US economy continually improving and also expects to see the overall unemployment rate fall below 6% by the end of the year.
This news is not only hurting the spot values of precious metals in the short-term, it is harmfully affecting the long-term outlook on metals as well.
Adding to the downbeat news for precious metals was a report on Wednesday that Barclays positively revised their forecast for spot gold by the end of 2014. Their revision moved their forecast for spot gold from $1,205 to a new high of $1,250. The bad news is that even this positively revised forecast sees spot gold at a level lower than it is currently at. Keep in mind, however, that this is just one financial institution’s forecast and by no means a binding prediction on what level spot gold will be at by the end of next December.
The market will continue to analyze the economic output of the United States, but will watch the Chinese economy even closer thanks to Monday’s downbeat manufacturing report. There have been rumors about the Chinese central bank possibly instituting new stimulus measures in the coming weeks, but these rumors have yet to be confirmed by anyone.