Precious metals rally on quantitative easing talks domestically, as well as internationally

 

Precious metals rally on quantitative easing talks domestically, as well as internationally. Gold in particular is continuing its upward movement as a result of the easing talks. Commodities manager Jeffrey Sherman said, “The gold market has been looking for any hints of any quantitative easing program. You are seeing this big bounce today off the fact that there could be something going on in euroland.” The ECB is potentially going to create new money to help sovereign bailouts within the eurozone, a potential boost to gold prices.

New home sales have fallen, creating a bit of a setback to the nominal housing market recovery. The drop was primarily due to a huge setback in the northeast. Economist Yelena Shulyatyeva said, “Housing will continue to recover gradually throughout the year, but fundamentals are not supportive of a fully fledged housing market recovery.” Meanwhile, fundamental data still suggests a marginal recovery as economist Joel Naroff said, “It is hard to believe that the market is turning downward when the home builders’ confidence index jumped in July to its highest level in over five years. Either developers are clueless or the data have yet to catch up with reality. I am on the side of the latter.”

Meanwhile concerns continue to grow over eurozone debt fears as a number of high ranking officials and even prime ministers are set to hit the European holiday season. After issuing a statement yesterday blasting bond traders for driving up Spain’s borrowing costs, Germany’s Finance Minister Wolfgang Schaeuble is now on a three week vacation. However, Germany’s Schaeuble and Prime Minister Angela Merkel are supported by gains in German bunds markets. The top two German officials’ vacation plans have investors looking elsewhere for crisis management.

At 5 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold, $1,605.30, Up $27.10.
  • Silver, $27.39, Up $0.49.
  • Platinum, $1,400.40, Up $13.80.
  • Palladium, $566.00, Up $3.40.

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The reactions to the Spain bailout are pessimistic

Goldman Sachs Group Inc. is forecasting a 23 percent return in a year for industrial metals with gold as one of their top picks. Jeffrey Currie, head of commodities research said, “Although the macroeconomic backdrop still remains uncertain, particularly in Europe, we believe that the selloff in commodity prices is likely overdone and the price risks are shifting more to the upside.”

Spain is now the fourth eurozone member to receive a bailout in the past three years when the debt crisis began in Europe. There is fear in the air that this bailout will put the nation in a deeper hole causing them to need assistance as well. Christian Reicherter at DZ Bank AG said, “This bailout doesn’t solve the euro-region debt crisis. There is skepticism about whether the money is enough for the banks and whether the nation might also need help, and this will keep Spanish bonds under pressure.”

The market is reacting to the Greek elections that are approaching with the U.S.A. stock market falling today. Investors are remaining cautious with the possibility of the Federal Reserve announcing another round of quantitative easing. Andrew Fitzpatrick at Hinsdale Associates said, “It’s a market that is looking to the next thing. It’s a market that is looking to the next thing. It could be Greece, and it could be further economic data. It’s a market waiting for possible Fed or European bank easing.”

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,597.60, Up $6.20.
  • Silver, $28.61, Up $0.05.
  • Platinum, $1,445.70, Up $18.60.
  • Palladium, $622.00, Up $10.00.
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