September 4th Silver Market Update

As of the writing of this post, precious metals are trending slightly upward, but their gains are diminishing by the minute. So far this week, most things have worked against the precious metals market. When things got underway on Tuesday, a slew of economic data was made public. Due to its upbeat nature, US equity markets made gains while spot values sunk considerably. Though metals bounced back a bit on Wednesday, an interest rate cut announced by the European Central Bank today is piling on the selling pressure once more.

The market’s attention this week has also shifted to the ongoing crisis in Ukraine. After talks of a ceasefire made rounds yesterday morning, those rumors were quickly shot down by the Kremlin, which claimed that it had no part in these supposed peace talks. The situation in Eastern Europe is growing more dire by the day, and though the market ignores it more often than not, it is still something to be aware of.

ECB Announces Rate Cuts

Today’s European Central Bank policy meeting was important to investors due to the simple fact that fresh monetary stimulus measures were expected to be announced. Expectations were met this morning when it was made public that the ECB was going to cut all interest rates by a massive 10 basis points. This move not only pushed the Euro to new lows, it also pushed the EU deposit rate further into negative territory. As a result of this move, US and European equity markets ticked up, as did the US Dollar.

Now, the investing world is forced to play the waiting game in order to see if this batch of monetary stimulus does anything in the way of improving the overall EU economy. If you can recall, stimulus measures made public a few months ago have yet to have any real impact on the economy as deflationary pressures continue to mount.

As we look ahead to the last day of the week, the eyes of the investing world will once again shift, this time to the all-importan US jobs data for August. Preliminary expectations hold that more than 220,000 new jobs were created last month. If tomorrow’s figures live up to expectations, the selling pressure being levied against pressure metals may grow more severe. The fact of the matter is that we are no in the midst of a bearish market where investors are exhibiting a high level of risk appetite. Because of this, the interest in safe-haven gold and silver has dropped off considerably and has not been able to successfully rebound. It will be interesting to see what the next few weeks hold, though early signs are indicating that they have nothing but more bad news in store for metals.

Posted in News

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