The Yen's Weakness Strengthens the Dollar Making Gold and Silver Prices Decline

5:58 AM


July 21, 2016 -- Stock prices rallied again yesterday making it 9 days in a row for gains in the major U.S. indices. The sentiment along Wall Street is "risk on" and safe-haven assets continue to wilt. Gold and silver both finished lower along with bond prices.

Equity traders appear confident that Fed officials aren't going to move toward withdrawing the stimulus punch bowl at next week's FOMC meeting. Hiking interest rates has proven far easier for officials to talk about than to actually do, so traders have good reason to discount the possibility.

It is a different story in Japan where central bankers are getting ready to double down on stimulus. Officials proposed a package that includes twenty trillion yen -- the equivalent of $188 billion -- to pay for infrastructure projects and new lending. The news further weakened the yen and boosted the U.S. dollar.

Japan's move will make it even harder for the Federal Reserve to tighten monetary policy. The Fed worries about a strong dollar relative to other major currencies, even though a dollar with greater purchasing power is beneficial to average Americans.

Live prices at MoneyMetals.com show gold currently trading at $1,322.65 per ounce on the global market, and silver is coming in at $19.46.

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