ECB to buy sovereign bonds

Mario Draghi presents his credentials as candi...

Mario Draghi presents his credentials as candidate ECB president (Photo credit: European Parliament)

“The euro is irreversible” said Mario Draghi as he announced the bond buying program at the ECB press conference in Frankfurt. The program is called “MOT” or Monetary Outright Transactions. It will focus on the secondary sovereign bond market where Draghi said it was necessary to deal with “severe” distortions in the bond markets.

Ahead of the meeting, precious metals were up across the board but most notably gold is once again over the $1700 mark. The euro has gained against the dollar due to Mario Draghi’s remarks that he would do “whatever it takes” within the European Central Banks mandate to save the euro. It will take time to see if the MOT program is considered “whatever it takes” and keeps the euro’s rally going. Gold has a strong inverse correlation to the U.S. dollar and as we have seen the Euro rally we have also watched gold rally with it, in fact, gold is at a five month high.

Closer to home today’s jobless report showed jobless claims decreasing to the lowest levels in a month. Estimates are that claims decreased by 12,000. Although this isn’t a monumental leap it is a step in the right direction and right now any positive movement is welcomed.

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

  • Gold, $1,702.00, Up $9.40.
  • Silver, $32.64, Up $0.32.
  • Platinum, $1,581.00, Up $4.40.
  • Palladium, $645.00, Down $2.00.
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Strong euro continue to boost Gold

 

Gold is holding on to morning gains following comments by the president of the European Central Bank, which have buoyed the euro for a second day. “You’ve got a rise in the euro, which means a weaker dollar, and a ‘risk on’ environment, so everything that looks like a risky asset goes up. Gold has been trading just like a commodity (lately) and is behaving like one today,” Natixis analyst Nic Brown said.

European Central Bank President Mario Draghi has stated that as part of the ECB’s effort to protect the survival of the euro, it will be buying Spanish and Italian government bonds. This move also is believed to help lower borrowing costs. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said at an investor conference in London. “And believe me, it will be enough.”

Business investment is looking to be cooler in the second half of the year, as orders for business equipment dropped in June. Lower American consumer spending and overseas demand have many companies delaying replacing equipment. “Business investment has definitely shifted lower,” said Tom Porcelli, chief United States economist at RBC Capital Markets LLC in New York. The European debt crisis and the looming “fiscal cliff” will “put downward pressure on orders, which will translate into weaker growth in the U.S.,” Porcelli said.

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

  • Gold, $1,615.90, Up $5.80.
  • Silver, $27.58, Up $0.02.
  • Platinum, $1,404.60, Up $5.20.
  • Palladium, $570.90, Up $4.60.

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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ECB president’s comments boost euro, Gold

 

Uplifting comments from European Central Bank President Mario Draghi have boosted the euro for the second straight day, and Gold is following suit. BNP Paribas analyst Anne-Laure Tremblay said that positive news from the eurozone may not be the only thing supporting the Gold price. “Yesterday’s move above $1,600 an ounce was driven by more positive sentiment towards Gold on the back of growing anticipation for QE (quantitative easing). A move above $1,630 an ounce would be the sign of a more durable upward trend,” Tremblay said.

American stock futures are also higher on Draghi’s comments. Miller Tabak strategist Peter Boockvar said, “We’re seeing another instance of central bankers trying to save the day with the threat of their printing machine. Whenever Draghi talks about ‘policy transmission’ being hampered, it’s his Morse code for restarting their bond buying program.” In his comments, Draghi said the euro is irreversible, reaffirming his stance to save the common currency from breaking up.

United States jobless claims historically tend to be volatile in the month of July, and 2012 has been no different. The report today showed a larger than expected drop in new claims, though many economists aren’t sold on the good news. Bob Baur of Principal Global Investors said, “I’m not sure we can see a clean number for another week or two yet. I look at the labor market and see it’s gradually healing, just healing very slowly.  Businesses are reluctant to do anything.” The less volatile four week moving average dropped, as well, and is currently at its lowest level since March.

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

  • Gold, $1,615.60, Up $5.50.
  • Silver, $27.69, Up $0.14.
  • Platinum, $1,411.10, Up $11.70.
  • Palladium, $573.80, Up $7.50.

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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