Gold keeps rising, Europe in the spotlight

 

English: European Central Bank ECB Eurotower i...

English: European Central Bank ECB Eurotower in Frankfurt a.M. Germany Deutsch: Europäische Zentralbank EZB Eurotower in Frankfurt a.M. (Photo credit: Wikipedia)

 

Gold and other precious metals had big gains last week due to the U.S.A. Federal Reserve meeting and the probability of another round of monetary easing. This week has started off with the same rise in prices and monetary easing continues to be the reason. However, the location is now changed to Europe and meetings of the European Central Bank (ECB). “The ECB is evidently planning to launch a new government bond intervention program, which would inject further liquidity into the market. This should also benefit commodities due to the lack of attractive alternative investments,” analysts at Commerzbank said in a note. Some speculate these actions by the ECB could be implemented as soon as this week.

 

A few weeks ago, the ECB President Mario Draghi said they will do “whatever it takes” to keep the euro as the major currency of the region. This week will be a good indication of what exactly Mr. Draghi and his associates have in mind to do.  “Draghi certainly has to present something,” said Guillaume Menuet, economist at Citi. “A document of some sort, something of substance is what markets want to see in order to justify valuations.” One of the main issues is not a plan of action, but rather a plan that all the countries involved can agree to.

 

In the United States, there were more negative economic reports released today. The August manufacturing report was shown to have the largest drop in over three years. Economists estimated the national factory activity to have a median of 50.0 and it came in at 49.6. It shows an unforeseen contraction in the sector. U.S. construction also fell off by 0.9 percent, as with the manufacturing report, expert predicted an increase as well. Both of these reports give more talk of monetary easing by the Federal Reserve.

 

At 1:00 pm (EDT), the APMEX precious metals spot prices were:
·    Gold, $1694.40, Up $8.30.
·    Silver, $32.27, Up $0.83.
·    Platinum, $1566.50, Up $28.20.
·    Palladium, $641.00, Up $11.60.

 

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CDT)! Or call us Fridays until 5 p.m. (CDT)! If you have any questions about investing in precious metals or simply would prefer to place your order by telephone, we are here to help.

 

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Gold price on the rise; China adds to stockpile

 

As the week begins, so does the rise in Gold prices. With reports coming out at the end of last week showing another rise in the United States jobless rate, the talk of more monetary easing from the Federal Reserve continues. “There is still room for easing if it is required, and there is still a perception that it may be required,” said David Jollie, an analyst with Mitsui Precious Metals. Another factor in the Precious Metals market is the high demand from China. Even though shipments of Gold went down in the last month, China is still on pace to overtake India as the world’s largest Gold market. “Although this was down on the previous month’s figure, it was well above the year on year level,” Commerzbank said in a note. “In the first half year, China thus imported 382.79 tons of Gold from Hong Kong, following a figure of 64.95 tons in the same period last year.”

In Europe, it may be a new week, but the news remains the same. There are many opinions on the best way to deal with the economic crisis in the region, but there are no signs of unity. While the European Central Bank has promised action, that will be next to impossible if the ECB does not have the support of the countries involved. While some of the nations are prepared to act, others seem to be lagging behind. “The Spanish seemed to think they could get a free ride from the ECB without conditions. That was never going to happen,” said a senior eurozone policymaker, speaking on condition of anonymity.

Reports in the United States are showing that productivity in the workforce is down. One expert said he believes that is the best case scenario at this time. “The only reason 1.7 percent GDP growth can go with 1 percent jobs growth is because productivity growth is less than 1 percent,” said Robert Gordon, a Northwestern University economics professor. These numbers, while not ideal, have created a drop in unemployment benefits claims over the last year.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,613.70, Up $6.40.
  • Silver, $28.00, Up $0.09.
  • Platinum, $1,404.00, Down $10.40.
  • Palladium, $581.10, Up $1.90.

 

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Gold waits on Central Bank meetings

 

The Gold price has started the week in a holding pattern. After last week’s significant climb of more than 2 percent, the yellow metal is waiting for a signal from the central banks in Europe and the United States this week to determine a course of action. Most expect European Central Bank President Mario Draghi to deliver on a promise he made last week of doing “whatever it takes” to save the euro. If he doesn’t, some believe it could have serious repercussions. “The market will be very disappointed if Draghi doesn’t deliver,” Commerzbank analyst Daniel Briesemann said. “The expectations for the upcoming ECB meeting are very high, and he must say something really significant. If he fails to do so, we will probably see lower commodity prices across the board, due to a stronger U.S. dollar.”

In the United States, the theme of the Federal Reserve discussions continues to be a third round of quantitative easing to help further stimulate the economy. In Europe, there is now talk of a round of easing for that region. The European Central Bank is to announce a decision Thursday regarding its future plan of action. While it is not believed there will be any drastic measures such as monetary easing happening this week, it is expected some action will be taken. That may come in the form of restarting the controversial bond purchasing program or more action on interest rates. Not all members of the European Union agree with such measures. The president of one of Germany’s largest banks is one of them. “The mechanism of bond purchases is problematic because it sets the wrong incentives,” a spokesman for Bundesbank President Jens Weidmann told Reuters.

As the Precious Metals markets await cues from the central banks, so does the stock market. “You won’t get movement either way; the market just has to catch up with itself,” said Ken Polcari, managing director at ICAP Equities in New York. “That being the case, certainly everyone thinks that Europe is going to come out with this big bazooka, and they also think the Fed will launch, so therefore the market is going to stay up here.”

At 1:03 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,619.70, Down $0.60.
  • Silver, $28.10, Up $0.51.
  • Platinum, $1,411.60, Up $3.10.
  • Palladium, $589.40, Up $16.50.

 

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Credit Outlook Dims for Germany; U.S. Fiscal Cliff Looms

 

Precious metals continue to hold firm in the serious head winds afflicting other commodities markets. Gold in particular has been relatively range bound but in the current market conditions, that’s not an entirely bad thing. Analyst Hayden Atkins said, “Markets sold off really heavily yesterday, and gold held up pretty well against that. It is maybe the one thing that has really stayed solid against some pretty solid headwinds elsewhere.” Meanwhile the issues facing the euro have actually helped Gold in the eurozone as evidenced by Commerzbank’s note to investors which read, “Thanks to the euro’s depreciation vis-a-vis the U.S. dollar, gold in euro terms has been making gains for some time now. Since mid-May an upswing has become evident which in the current market environment should take the yellow metal on a further upward trajectory.”

Meanwhile Moody’s downgraded the credit outlooks of a few of the remaining Aaa rated countries in the eurozone. Those countries are Germany, the Netherlands and Luxembourg. Basically the main countries that would provide assistance to other countries in the region that may need financial assistance. The service released a statement saying, “Moody’s now has negative outlooks on those Aaa-rated euro-area sovereigns whose balance sheets are expected to bear the main financial burden of support — whether because of the need to expand the European Stability Mechanism (ESM) or the need to develop more ad hoc forms of liquidity support.”

U.S. Treasury Secretary Timothy Geithner has already begun speaking towards the potential outcome of kicking the can down the road with the current fiscal situation. In an interview yesterday he said, “Many people who look at this say that, yes, you’d at least get a recession out of this. The cumulative size of those cuts – tax increases and spending cuts – are very, very large relative to the economy.” He also warned that any governmental failure could be quite damaging, relating it to the negative impact of losing the U.S. credit rating last year over debt ceiling talks. He said, “You saw huge damage to consumer confidence, to business confidence, and to confidence around the world in the United States because you had people in public office threatening to default on our nation’s obligations.”

At 9:00 a.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold, $1,579.90, Up $1.00.
  • Silver, $27.06, Down $0.08.
  • Platinum, $1,397.60, Down $1.30.
  • Palladium, $569.40, Down $2.60.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EDT)! Or call us Fridays until 6 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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Gold in Postive Territory

Precious metals are rising again, largely on safe haven appeal, as concerns in Spain and Greece have not abated and gold imports in China are climbing. HSBC wrote, “Gold prices may be supported by China’s growing appetite for bullion, as imports from Hong Kong climbed to record highs. Furthermore, imports of gold coins, which are reported in a separate category in the trade data, increased significantly to 1,876 kg in April from 5 kg in March. The ability of China to sustain gold imports is impressive, considering that the economy is showing signs that growth is cooling and income growth is moderating.” Meanwhile Commerzbank feels that gold has “regained its safe haven status.”

At the G-7 conference, Spain’s Treasury Minister Cristobal Montoro basically sounded the alarm about how bad the banking situation is in Spain at this time. As the debt gets worse the access to credit to help bail themselves out is becoming more and more detrimental. He even called for European assistance, a departure from what other government officials had wanted, which was to raise the funds itself. Germany is pushing Spain to accept the bailout. In an interview Montoro said, “The risk premium says Spain doesn’t have the market door open. The risk premium says that as a state we have a problem in accessing markets, when we need to refinance our debt.”

Central banks remain squarely in the crosshairs as the main target to appease economic concerns. Federal Reserve Chairman Ben Bernanke is expected to testify before a congressional panel Thursday about the current economic outlook and monetary policy. Chief strategist Michael Derks said, “Policy makers would appreciate that both growth and inflation remain too low, and that financial conditions have the potential to be eased still further. As such, Bernanke and his fellow board members are probably considering a further round of [quantitative easing], coupled with an extension of their forward guidance on monetary policy.”

At 8:02 a.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,617.70 – Up $4.30.
  • Silver – $28.41 – Up $0.32.
  • Platinum – $1,440.80 – Up $11.50.
  • Palladium – $613.50 – Down $0.40.
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