Factors that are Currently Affecting the Precious Metals Market 5.00/5 (100.00%) 43 votes

Whether you’re a long-time precious metals collector or if you’re just starting to invest in coins or bullion, it’s important to keep track of current market conditions. By doing so, you’ll be able to buy and sell when the time is right. Unfortunately, the precious metals market is far from simple. Like any financial market, it is affected by a variety of things. During the course of a single week, conditions can change dramatically. At the beginning of the week, gold and silver prices may be on upward trajectories; by the time the week is over, they may be dropping precipitously.

Different factors affect the precious metals market at different times. After paying attention to precious metals news for a while, you’ll quickly see that the topics that dominate the market are almost cyclical in nature. The price of a certain foreign currency may be the topic of the day at one point, but then economic factors in a different country may change and affect the market in an entirely different way. One thing’s for sure: There’s never a dull moment. As for right now, the market is undeniably in flux. Will the price fluctuations that have become the norm finally settle down in 2013?

Price Fluctuations in the Precious Metals Market
Prices are never really stagnant in the precious metals market. When the economy is thriving in general, though, prices tend to be relatively stable. During rocky economic times, gold, silver, palladium and platinum prices tend to be all over the place. Needless to say, these conditions make collectors and investors understandably nervous. The economy has been struggling for several years now, so price fluctuations are almost to be expected. There’s a good chance that this will change in 2013, though, because many analysts are confident that the economy is turning around.

It’s the Economy
The economy plays a direct and dramatic role in the value of precious metals. The world economy and the U.S. economy both come into play. Unlike investing in a specific stock market, you have to constantly keep worldwide economic factors in mind. Certain events can trigger changes in national stock markets, but they always have profound effects on the precious metals market. The U.S. is one of the most powerful countries in the world, and its economy plays a major role in the prices of precious metals too.

How is the U.S. economy expected to fare in 2013? That’s the question that’s on everyone’s minds, but no one can answer it definitively. Recent developments provide clues to how the economy will perform this year, however, so it’s worthwhile to take a closer look at them. A prime example is the fiscal cliff that dominated the news near the end of the last year. For a minute there, it looked like the country would hurdle over it. Precious metal investors and other investors were understandably anxious. Fortunately, a last-minute compromise was reached. It’s more like a stopgap measure, however, and additional steps will need to be taken in the spring to settle the matter for good.

The more people who are working steadily, the better the economy is. Market analysts closely watch jobless claims reports for this very reason. So far in 2013, the news is somewhat mixed. The most recent jobless claims report was a little disheartening and showed that the number increased by more than 4,000. If the news had been positive, it would have given investors a lot more confidence. Of course, it’s just a single report. Things change quickly, and more people could return to work in the next few weeks.

New reports are released seemingly every day, and it’s smart to keep track of them to get a feel for what the precious metals market will do. Major news events can impact financial markets as well, and Fed Reserve Chairman Ben Bernanke’s big upcoming speech is a prime example. The sheer anticipation of the speech is generating a lot of buzz and is most likely affecting gold and silver prices in subtle but important ways. Once the speech has been given, everyone will analyze it closely. Bernanke’s thoughts about things like the debt ceiling and spending cuts are sure to trigger price movements.

Worldwide Factors that Affect the Precious Metals Market
It’s a mistake to strictly focus on the U.S. when considering factors that affect the precious metals market. The value of the U.S. dollar often impacts gold and silver prices, but other currencies can have similar effects. Investors anxiously awaited news about the euro, upon which the ECB was potentially going to enforce a rate change. That ultimately didn’t come to pass, and the news made the value of the euro rise considerably. The value of precious metals quickly rose as well.
Precious Metals Global Market
Another example of how foreign currencies can affect the value of precious metals like gold and silver can be found in recent news stories about the Indian rupee. The rupee has recently been gaining in value against the U.S. dollar. This action has prompted an increased demand for gold. In turn, gold prices have risen. This trend could very well continue. If it does, it could temper the effect of other developments that may cause the price of gold to drop. In the end, gold prices could actually hold steady for a fairly lengthy period of time.

The ongoing financial crisis in Greece has dominated the news for a long time. There’s no question that events in Greece have impacted the prices of palladium, platinum, gold and silver. However, developments in Greece don’t come close to having the kind of impact that the Chinese economy does on the entire world. Everyone across the globe watches events in China closely, and they are especially focused on the state of the Chinese economy. China’s GDP continues to grow. If it grows more than expected, the impact on precious metals values is sure to be positive. There’s a slight chance that its growth will fall short of expectations, which could make prices stagnate or even drop.

Up-to-Date News is Available Online
In years past, tracking important news stories that affected the precious metals market was easier said than done. The Internet has changed that, though, and it’s easy to stay informed about the current state of the market. There are tickers that are constantly updated, of course, and they are absolutely priceless. However, there are also sites that continually track relevant news stories, and it pays to visit them daily as well. Doing so will give you a much better understanding of the big picture.

A word of caution: Don’t believe everything you read online. That’s especially true when making important investment decisions. Unfortunately, it’s easy for a site to post incorrect or misleading information about the precious metals market. Stick with reputable websites that have valid, up-to-date information. Monex is a prime example and is worth visiting because you can trade precious metals through the site as well. At first, keeping track of stories that affect precious metals prices can be daunting. Before too long, it will be like second nature. With the right information, you’ll be able to make strategic, informed decisions when buying and selling precious metals.