Gold pulled on both sides; eurozone disappoints again

U.S. stock futures are trading higher this morning, while the Gold price is relatively flat again. The yellow metal’s price continues to be pulled in different directions due to the looming fiscal cliff dilemma. On one hand, investors see Gold as a safe haven, and the uncertainty facing the U.S. in the coming months has those investors concerned. On the other hand, there could be a “liquidity-driven risk event,” according to Daniel Brebner of Deutsche Bank, which would cause investors to cash out of Gold to hold the U.S. dollar.

Disappointing news in the eurozone continues, as a report showed that factory output in the region fell by the most since January 2009. Germany, normally a strong point for factory output, fell by a substantial amount. Expectations that the eurozone will see another recession (the second in three years) are rampant, and this report only makes it worse.

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

  • Gold, $1,729.80, Up $3.00.
  • Silver, $32.64, Up $0.09.
  • Platinum, $1,585.20, Down $1.40.
  • Palladium, $644.00, Up $6.40.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EST)! Or call us Fridays until 6 p.m. (EST)! 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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Metals flat after jobless report

English: A frame from a screencast from the US...

English: A frame from a screencast from the US House Financial Committee full committee hearing “An Examination of the Extraordinary Efforts by the Federal Reserve Bank to Provide Liquidity in the Current Financial Crisis which took place Tuesday, February 10, 2009, 1:00pm, 2128 Rayburn House Office Building. The frame shows Chairmen Ben Bernanke responding to a question posited by John E. Sweeney Full Committee (Photo credit: Wikipedia)

Precious Metals are mostly flat this morning as the release of the weekly jobless claims report has had little effect on Gold and Silver. The four week moving average of new claims rose by 1,500, while the week to week change was flat. The main focus of the markets continues to be the Jackson Hole Economic Symposium, and, more specifically, Federal Reserve Chairman Ben Bernanke’s speech Friday. Daryl Guppy, chief executive at Guppy Traders, said, “We are sitting back on this (long term uptrend) point (in the stock market) so we either see a strong reaction away or a strong break away from this level (in response to Bernanke). And that’s the key factor we’re seeing across the board, because we are sitting on critical levels.”

Europe is clearly taking a backseat to the Fed’s potential monetary easing announcement, but the European Central Bank (ECB) is readying for an ECB Governing Council meeting next week. James Reid of Deutsche Bank said, “For now, Europe is in a holding pattern ahead of clarity surrounding the next move in the great ECB bond buying maneuverings, and the U.S. is in limbo ahead of Bernanke’s Jackson Hole appearance tomorrow. For the latter, speculation mounts that Bernanke won’t say anything overly new in his speech.”

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

  • Gold, $1,664.70, Up $3.30.
  • Silver, $30.91, Down $0.02.
  • Platinum, $1,526.00, Up $4.70.
  • Palladium, $633.90, Down $2.50.

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 slightly lower; market still analyzing FOMC minutes

 

American stock futures and Gold are slightly lower this morning as investors continue to analyze the latest Federal Open Market Committee minutes. The top story hasn’t changed; all eyes are firmly on a small town in Wyoming. “Given all the mixed messages, the Jackson Hole symposium next Friday is building up to be a key event as we look forward to the latest download from the chairman himself,” said James Reid of Deutsche Bank.

Yesterday, the St. Louis Federal Reserve president said that more easing may be unnecessary. Today, one of the longtime supporters of further quantitative easing by the Fed, Chicago Fed President Charles Evans, stated his view on the matter. “The outlook for growth is 2 percent, if we are lucky 2.5 percent, over the next 18 months to two years. Back in the spring, we thought it was going to be 2 1/2, 3 percent. … We stepped down our outlook; unemployment is 8.3 percent; there’s a lot of reason to do more,” he said.

Though the Gold price has come off the recent rally this morning, Pradeep Unni of Richcomm Global Services said that it likely won’t last long. “Having got the necessary signals from the Fed for QE3, the market is just waiting for a confirmation to spike higher,” he said. “Any consecutive release of weaker than expected economic data will only add fuel to the fire.”

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

  • Gold, $1,668.90, Down $2.40.
  • Silver, $30.58, Up $0.04.
  • Platinum, $1,542.00, Down $13.90.
  • Palladium, $644.80, Down $13.30.

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

 

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Euro region unusually divided before summit

Precious Metals are trading lower this morning, thanks to investors moving to the sidelines ahead of the European Union summit, which starts tomorrow.  Michael Turner of RBC Capital Markets said, “This could be a reasonably long holding pattern until the headlines start to flow from the European Council’s heads of state summit tomorrow.”  The wait-and-see approach has currencies like the U.S.A. dollar and the euro trading mostly flat.

While summer is likely to not hold any big moves by policymakers in the U.S.A., Europe, or China, Deutsche Bank analyst Daniel Brebner believes one thing could support gold.  “…I think we’ll continue to see very steady buying by central banks, which have been in the market for the last couple of quarters or so.  That should help gold prices from weakening…” he said.

European leaders aren’t exactly agreeable ahead of the summit.  German Chancellor Angela Merkel, in response to euro bonds being a potential solution to the debt crisis, said that she doesn’t expect that to happen in her lifetime.  With borrowing costs in Italy and Spain reaching dangerous levels, the leaders of those countries are calling for assistance, and Merkel wasn’t keen on that idea either.  Spanish Prime Minister Mariano Rajoy said, “The most urgent issue is the one of financing.  We can’t keep funding ourselves for a long time at the prices we’re currently funding ourselves.”

At 9 a.m. (EDT), the APMEX precious metals spot prices were:

  • Gold – $1,567.30 – Down $9.10.
  • Silver – $26.80 – Down $0.36.
  • Platinum – $1,409.70 – Down $19.20.
  • Palladium – $580.10 – Down $14.60.
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Retails sales fall in May; Futures point to a lower start

American stock futures are pointing to a lower start, and were pushed even lower after a report showed that retail sales fell in May.  Jim Reid of Deutsche Bank said, “In reality, price action is likely to remain unpredictable as we move towards this weekend as position squaring will likely dominate ahead of the Greek election this Sunday.”  The focus is squarely back on Greece in the eurozone, as the latest election could make-or-break the repeated bailout attempts for the troubled country.  Gold recovered from early losses after the retail sales report.

Since 2008, over $6 trillion has been printed as part of money-printing or quantitative easing programs by the central banks of the world.  Further quantitative easing is on all of the “Big Four” (Federal Reserve, European Central Bank, Bank of England, Bank of Japan) central banks’ agendas in the near future.  Many investors assume that further easing is sure to happen, according to Bank of America Merrill Lynch’s Gary Baker.

The central banks seem to know a way to offset the inflation created by money printing, however.  According to the World Gold Council, Gold makes up more than 70% of the reserves of countries like the U.S.A., Germany, Italy, and France.  Kazakhstan is the latest to significantly increase its holdings in the metal, and by the end of the year expects to have holdings up to 20%.  The country has purchased 16.2 tons of Gold through April of this year, and expects that number to be 24.5 tons in the second half of the year.

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

  • Gold – $1,622.50 – Up $8.70.
  • Silver – $29.02 – Down $0.03.
  • Platinum – $1,462.30 – Up $5.90.
  • Palladium – $625.10 – Up $0.90.
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Gold’s place in portfolios; monetary easing outlook

Gold has seen a drop in price in the last couple of weeks. This has investors wondering if this is the end of the great run gold has been on. ANZ’s Nick Trevethan is not ready to say so.  “Gold is neither currency nor commodity, but deserves to be treated as a unique asset class.” He added, “Gold needs to be seen as a portfolio diversifier and stabilizer. It should not be viewed in the context of simply inflation.” Tom Essaye, President of Kinsale Trading added, “gold tends to be whatever the market wants it to be at that point in time. For now, the market is treating gold as though it is a risk asset and commodity but if things get bad enough, it will become that store value, that emergency store value that it has been historically.”

Greece is still in the headlines and is having an effect on the precious metals market. As the political picture in Europe is at a standstill, investors are seeing the benefits. Mitsui Precious Metals analyst David Jollie says, “In the next few weeks leading up to the Greek election, there will be plenty of opportunities for people to worry about the European debt situation and the health of the euro in general. I think that will be positive for gold, certainly in the absence of foreign exchange movements.”

As the reports keep coming in and as the financial forecast looks lower, the chances of another round of monetary easing by the U.S.A. Federal Reserve gathers momentum.  It’s not only a weak economy, but as inflation comes down, it could be another reason for the Fed to implement some more stimulus,” said Gary Pollack, head of fixed-income trading at Deutsche Bank. Past monetary easing has brought positive results in the precious metals market.

At 1:00 p.m. (EDT), the APMEX precious metals spot prices were:

  • Gold – $1593.00- Down $0.40
  • Silver – $28.31- Down $0.48
  • Platinum – $1462.60- Up $1.30
  • Palladium – $613.00- Up $7.40
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