Precious metals spot values are edging higher as of the writing of this post, fueled by physical buying in Asia after last week’s pullback. Though this buying is boosting spot values as of now, it is going to take much more than bargain-hunting buying to revert the current downward trend of metals. This week, on the whole, will prove to be fairly exciting simply because of the quantity of economic activity that will be taking place. The marquis event of the week will come over the course of Tuesday and Wednesday in the form of the most recent Federal Open Market Committee meeting.
On the geopolitical front, a ceasefire agreement between pro-Russian forces and Ukrainian forces seems to be holding, now into its second week. This news is good for the people of war-ravaged Eastern Ukraine, but is not so good for those who have a lot invested in the precious metals market. As the overall marketplace turns increasingly bearish by the day, metals now have to cope with the fact that the situation in Ukraine–one that has provided fundamental bullish support for months now–is getting less tense by the day. It will be interesting to see where this situation heads in the coming days and weeks and, as such, we will continue to keep a close eye on matters.
Attention Shifts Towards FOMC Meeting
If you are at all accustomed to the global trading atmosphere, it should come as no surprise that the attention of the market will be shifting towards the Federal Open Market Committee. This time around, investors will be paying attention in order to confirm that Quantitative Easing will be done and dusted by the end of October as well as to seek out any and all information with regard to the future of interest rates in the US.
Though QE’s departure is more or less expected by the market, there are conflicting beliefs with regard to when and by how much interest rates will be raised. Just last week, a survey from the Federal Reserve bank of San Francisco indicated that investors might currently be underestimating just how quickly the Fed can raise rates.
In my opinion, this week’s meeting will more than likely not see much new information dealt regarding interest rates, but investors will be paying attention nonetheless. I am of the belief that members of the Fed will simply reiterate their confidence in the strength of the US economy as well as point out that there is still room for improvement ahead of any interest rate hikes. As a result of all this uncertainty, most investors are simply holding their positions until the conclusion of the Fed’s meeting on Wednesday afternoon.