As investors sold Gold to cover other losses, the price of Gold fell as low as $1,532 per oz. overnight on Monday, but rebounded quickly. This quarter brought a 12% drop in the stock prices. The past week is the last week of the worst market quarter since the financial crisis; however, analysts expect the volatility to continue. The European financial system is still in shambles. The U.S. isn’t much better off (if at all). A November deadline looms over more deficit talks.
“Gold is one of the few assets that remain in positive territory this year, in a sense it is one of the last assets standing; as investors head for cash they sell the assets that have performed,” wrote Edel Tully, a London- based analyst at UBS AG, “While Gold’s retracement was not really a surprise, the depth of its plunge certainly was.” Also, Silver prices fell as much as 16% to an overnight low of $26.07. It has since rebounded above $30, but the Gold-to-Silver ratio rose up to 53:1; it has been in the 40:1 range for most of 2011. The CME Group Inc. increased the margin requirements for both Gold and Silver as metal prices dropped below existing requirements two days in a row. This action stabilized prices by removing some of the speculators from the market; the prices bounced higher and became steady later in the week.
The August durable goods report was released this week. The number of orders dipped by 0.1%; it had been expected to rise by 0.4%. The report indicated an unexpected slowdown in manufacturing. Orders placed for motor vehicles dropped by 8.5%. Platinum and palladium are highly used in the automobile industry, so this slowdown in motor vehicle bookings might have been a contributing factor to recent price declines in those metals. Stocks relinquished some of their earlier gains on the news of this report.
In a bit of good news, unemployment claims dropped by 37,000, finally breaking below 400,000 claims. The four-week moving average that is typically a better indicator of trends fell by 5,250 to 417,000. In order to show true improvement in the unemployment problem, the moving average needs to fall below 400,000. This comes just after Federal Reserve Chairman Ben Bernanke called the weak labor market a “national crisis.”
Geopolitical issues continue in Yemen as a truce was broken after two people were killed in the capital city of Sanaa. Saudi Arabia and the U.S. fear that the unrest could endanger Western interests in the Gulf due to a large al Qaeda wing based in Yemen. However, a key al Qaeda leader was killed in Yemen by a CIA drone strike early Friday.
The recent lowered gas prices are a signal that demand is low; the price of crude oil fell substantially. Oil prices could be predicting another recession, as crude has fallen more than 15% in the last three months on fears that a recession will temper demand. “Any resolution in Europe is likely going to result in lower spending…” said independent oil analyst Andrew Lipow, “…that means lower growth rates and poorer demand for oil.” The U.S. Department of Energy also reported that gasoline demand was down last week by 2.4% from the previous year.
The market continues to suffer from headline risk – large swings in prices due to the headline du jour. Markets were pushed higher on Thursday by news of lower jobless claims and the news that Germany’s parliament voted to pump more funds in the European Financial Stability Facility.
The bulls and bears continue to battle it out on Wall Street, but only time will tell who’s on the right side of history.
Weekly Spot Prices
Spot Gold prices opened this week at $1,641.00. The high was on Tuesday, Sept. 27th at $1,679.20, while the low for the week occurred on Monday, Sept. 26th $1,35.00. Gold ended the week down $12.50 at $1,628.50. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.
Spot Silver prices opened this week at $30.51. Silver reached a high of $33.59 on Tuesday, Sept. 27th, while this week’s low for Silver occurred on Monday, Sept. 26th at $26.15. Silver ended the week down $0.49 at $30.02. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.
Spot Platinum prices opened this week at $1,609.70 and ended the week down $89.31 at $1,520.40. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.
Spot Palladium prices opened this week at $636.80 and ended the week down $21.20 at $615.60. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.
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