Morning Gold & Silver Market Report – 8/10/2012


FALLING IMPORT PRICES COULD LEAD TO MORE QE

Import prices in the U.S. fell unexpectedly in July, extending the streak to four months of declines.  The decline in import prices could be one more reason for the Federal Reserve to ease monetary policy further.  Historically, tools such as quantitative easing have been very supportive of Precious Metals prices.

The possibility of further easing is one of the reasons gold investors are the most bullish in five weeks, according to Bloomberg.  Among the factors supportive of the Gold price are disappointing economic figures out of China and Europe.  Colin O’Shea of Hermes Investment Management Ltd said, “More quantitative easing will certainly be beneficial to commodities (like Gold).  Do you need more QE to drive the market higher?  Probably not.  The demand side of the equation has been pretty robust.”

The strongest economy in the eurozone, belonging to Germany, is inching closer to a recession.  Joerg Kraemer, chief economist at Commerzbank, said, “The German economy is losing momentum – there’s no doubt about that – and in the third quarter the economy will shrink compared to the second quarter.  Things will go downhill from here.  The German economy is not faring as badly as the rest of the eurozone, but it can’t disconnect itself, especially as growth in China has slowed and continues to do so.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,616.90, Down $1.80.
  • Silver, $27.85, Down $0.36.
  • Platinum, $1,402.30, Down $11.50.
  • Palladium, $581.00, Down $7.30.