Gold, silver, platinum, and palladium spot values are conceding value steadily on a morning when things are much quieter around the global marketplace than usual. After last week’s massive gains made by most metals, it really comes as no surprise that a lack of risk aversion is pushing metals back down to where they were a week ago. Despite this 5-day session already shaping up to be a quiet one, investors are still paying close attention to what little economic data is making its way to the market.
Weak EU Data Persists, Risk Aversion Softens
Last week began in much the same fashion today has, slow and devoid of any noteworthy economic events for investors to pay attention to. Shortly thereafter, however, things began to gain momentum as a stream of weak European Union economic data manifested itself and sent reverberations around the investing world. Among these weak reports was one claiming that Portugal’s second-largest bank was in a bit of trouble financially. After it was reported that the bank’s parent company missed a scheduled debt payment, things began to spiral out of control as wider fears about the stability of the EU financial system as a whole surfaced and spread like wildfire. With the memory of Europe’s sovereign debt crisis still fresh in their heads, investors scrambled away from risk-laden assets and instead turned to the relative safety offered by precious metals, the US Dollar, and US treasuries.
When markets opened today, many were expecting to see much of the same risk-aversion dominate the trading atmosphere, but such was not the case. Instead, investors exhibited a calmer attitude and were seen taking on risk-assets much more readily than they were last Thursday and Friday. This less risk-averse attitude persisted even despite a report showing that EU industrial production fell by more than 1% from April to May. To be fair, the report went on to show that annualized industrial production in the EU was up by .5%.
As we head further into this week, investors and market analysts alike will continue to keep close eyes on bond yields across Europe and their potential influence on the market.
Janet Yellen Scheduled To Address Congress
The biggest piece of data for the week from a US standpoint is Janet Yellen’s scheduled addresses to Congress, expected to take place on both Tuesday and Wednesday. After last week’s FOMC minutes offered investors nothing in the way of insight into when the Fed plans on hiking interest rates in the US, all eyes will be on what she has to say to Congress regarding monetary policy in the US.
Apart from Ms. Yellen making her Congressional rounds, there really isn’t too much else on the slate for this week. Economic data in the US and abroad is light, and what little data is making its way to the public is expected to have a marginal impact on the precious metals market, at best. Still, with metals falling as much as they have already this morning, I expect that there is a lot of price movement going to happen over the course of the next 4.5 days or so.