Gold and silver are trading steady through the early morning hours of Monday, though the downward pressure weighing on them is still quite evident. This week is going to be a busy one, as is the case with most first weeks of the month. There isn’t much US economic data on the slate this week, but rather a healthy load of data from the European Union, capped off by the European Central Bank’s policy meeting which is scheduled to be held on Thursday.

The crisis in Ukraine has officially faded to the background of the marketplace’s concern as there have been little to no new events to talk about. While the crisis is still far from resolved, the general lack of violence and deescalating of tensions is working against the spot values of gold and silver. Now, as safe-haven demand seems absent altogether, precious metals investors are growing increasingly concerned about the lack of bullish data in conjunction with the overflow of bearish data we have been seeing of late.

ECB Meeting May Have Potentially Harmful Outcome For Metals

The talk of the marketplace this week is without a doubt the European Central Bank’s monthly policy meeting. Ever since the last few days of last week, investors began holding their positions in anticipation of the meeting. Currently, investors are expecting to hear the ECB announce new monetary stimulus in the wake of Thursday’s meeting, but in all reality, this is mere speculation. Despite the widespread presence of deflation in and around Europe that has been a factor for the past year or more, there are still some market analysts out there who believe any monetary stimulus is still a while away.

With that said, it remains important that we discuss the possible ramifications fresh stimulus measures in Europe will have on metals. The formula is simple, more monetary stimulus means for a devalued euro currency. Should the euro lose any value, it is more than likely that the US Dollar will receive a significant boost. As is almost always the case when the US Dollar surges forward in value, gold and silver spot values are more than likely going to come under additional pressure.

In fact, it seems as though that pressure already began to mount before US markets opened today due to the latest EU manufacturing PMI reading for May. Compared to April’s manufacturing PMI reading of more than 53, May’s came in just barely above 52. This news prompted the US Dollar to make gains against the euro currency. Though gold and silver have not taken significant hits so far today, it is more than obvious that they are feeling a boatload of downward pressure.

Perhaps the only reason why gold and silver have not declined in value in the wake of the PMI report is the fact that China’s manufacturing PMI, released over the weekend, showed signs of a recovering Chinese manufacturing sector. Officially, China’s manufacturing PMI inched forward to 50.8, up from a reading of 50.4 in April. As you may or may not know, any PMI reading above the 50 threshold is indicative of a growing economy. As is almost always the case, upbeat economic data from China, the world’s largest consumer of precious metals, is going to help precious metals. Still, this week is far from over and investors will be waiting with bated breath to see just how things unfold over the course of the next 4.5 days or so.