Weekly Gold & Silver Market Recap for April 06, 2012

by John Foster. Email John.

Modern-day meeting of the Federal Open Market ...

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)

FED MINUTES MOVE THE MARKETS:

The major news of the week was the release of minutes from the Federal Open Market Committee meeting.  There was little discussion of any plans for future quantitative easing by the Federal Reserve.  Stocks and commodities — including precious metals — experienced a significant selloff, with prices for Gold and Silver dropping to levels not seen since mid-January, making both metals particularly attractive from a physical demand perspective. However, some analysts are saying that the Fed’s current policy can still support Gold prices, even without more easing. In a recent report, James Steel of banking giant HSBC said, “Policy is already ultra-accommodative by conventional monetary standards, and therefore Gold-friendly. This may be overlooked or underestimated in the current sell-off, we believe.”

 SPAIN THE NEW GREECE?

The euro is feeling the effect of Spain’s debt crisis, which is not being fully contained at the same time borrowing costs are on the rise. “We haven’t seen any major improvements in the European debt situation,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “After Greece, investors may be beginning to shift their focus onto countries like Spain, Portugal and Italy. I expect the euro will gradually sink as the region’s economy deteriorates.” In Spain, last week’s budget announcements coupled with the release of less-than-stellar debt-to-GDP ratio have a number of investors concerned, as the levels are well in excess of previous estimates. This is the highest debt level in 22 years. Last year, the debt-to-GDP ratio was 68.5 percent, while this year it has climbed to 79.8 percent. Although this ratio is less than the European Union average, it is still quite high and climbing. Continue reading

Weekly Gold & Silver Market Recap for March 30, 2012

by John Foster. Email John.

Gold prices moved below $1,660 an ounce  this week, as profit-taking accelerated due to a COMEX options expiration. A smaller-than-expected increase in U.S. manufactured goods orders added to downward pressures as the dollar moved to session highs versus the euro. However, the overall long-term projection remains strong. Goldman Sachs said this week, “As we look forward, our U.S. economists forecast subdued growth and further easing by the Fed in 2012, which should push the market’s expectations of real rates back down near zero basis points, and Gold prices back to our six-month forecast of $1,840 an ounce.”  According to Goldman Sachs, Gold’s price is too low compared to real interest rates, and Matthew Lynn of Strategy Economics commented this week on the buying power by central banks in regards to Gold, saying, “By holding more Gold, central banks are insuring themselves against their own profligacy. They print money. The price of Gold goes up. And if they hold a lot of the stuff in their vaults, they are the big winners from the rise in price.”

The recent increases in crude oil prices have left former General Electric CEO Jack Welch distraught regarding the condition of the U.S. economic recovery. “It’s not taking off. We’re sort of relatively strong but not booming,” Welch said in a CNBC interview. “I am normally to one extreme or another, and I’m a little shaken about not knowing where this is going.” He said he has a lot of uncertainty about the economic recovery. The rising gasoline costs and tax uncertainty are key components to his opinion. “Gasoline prices — you can’t have this jump and not think that it affects the pocketbook,” Welch said. This is already starting to affect consumer confidence. Continue reading

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Monday links: Gold and Silver rise on Bernanke comments

Precious Metals

The problem of fake gold bars (Reuters)

Bernanke Lends a Helping Hand to Gold and Silver (Fox Business)

The Drilled Gold Bars Filled With Tungsten (Forbes.com)

Gold ends at two-week high, rallies on Bernanke (MarketWatch)

The World’s Biggest Markets For Gold Are On Strike (BusinessInsider)

Thank you, Mr Ben Bernank (TF Metals)

Markets

Stocks rise sharply after Bernanke suggests economy still needs help (Washington Post)

MF’s Corzine Ordered Funds Moved to JP Morgan, Memo Says (Bloomberg)

Economy

Bernanke says U.S. needs faster growth (Reuters)

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Weekly Gold and Silver Market Recap for March 16, 2012

After a week of mostly positive news for the economy, the dollar is relatively stronger, pushing down the price of precious metals. Gold opened the week at $1700 and is closing the week down by about $40.

by Robert Davis. Email Robert.

The size of China’s trade deficit took markets by surprise this morning. Its deficit of $31.48 billion is the largest in 12 years. Economists had expected the gap to grow as a result of seasonality, but not by as much as it did. Overall, this points to a weakening Chinese economy. The slowdown is happening faster than the Chinese government expected. Senior Chinese officials are hinting that the country’s currency may not appreciate as quickly as it has the past couple of years. It is also expected that bank lending will be encouraged in order to push more liquidity into the system.

The world’s largest banks are looking more favorably at the euro. Bloomberg news surveyed more than 50 strategists and reported that their median estimate predicts a stronger euro for the second and third quarters. A stronger euro could be positive news for Gold prices. The rising euro should lower the U.S. dollar, and the price of Gold typically would go up as a result. Continue reading

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