Profit Taking Pulls Down Stocks, Precious Metals

 

U.S. stock futures and Precious Metals are down slightly this morning, as investors are taking profits on the recent gains.  News of a downgrade to the outlook for Greece’s sovereign debt rating also affected the markets, as the EU and International Monetary Fund seem less likely to provide more bailout funds to the troubled country.  Also, the Bank of England paved the way for another round of quantitative easing for its country, cutting growth and inflation forecasts.

At least one analyst believes that the recent market rally is actually just setting up the stock market to fall.  “I think we’re in choppy waters and that continues,” Charlie Morris of HSBC Global Asset Management said.  “You need to trip the market to have a proper collapse.  So you almost need to set it up with a rally, get everyone excited and then it can fall.  If there are risks, the risks to a very negative market come after this rally fades.”  In the long-term, traditionally, steep stock market losses are supportive of the Gold price.

The main topic supporting the price of Precious Metals right now is still the possibility of future monetary easing by the U.S. and the eurozone.  Richcomm Global Services senior analyst Pradeep Unni said, “Gold seems to be supported by hopes that Europe and the United States would launch more stimulus measures to help shore up their faltering economies.  Investors are betting that the festering debt crisis in the eurozone could push the ECB to launch a new round of bond-buying soon.”

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

  • Gold, $1,608.40, Down $2.40.
  • Silver, $27.90, Down $0.30.
  • Platinum, $1,403.70, Down $7.70.
  • Palladium, $586.50, Down $3.20.

 

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