Gold prices are on the move

FRANKFURT AM MAIN, GERMANY - SEPTEMBER 27:  Th...

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Precious Metals continue to move upward as investors continue to view the recently released Federal Reserve policy meeting minutes in a positive light.  Hopes continue to grow that the Fed will take some action soon to boost the economy. “The default action has changed from do nothing to do something,” Mitsui Precious Metals analyst David Jollie said. “This means that we can expect to see some action soon, but the latest minutes imply the Jackson Hole and the September 12-13 meetings are not likely to see QE3 launched.”   The Platinum price is still feeling the effect of labor interruptions as clashes between the police and striking miners in South Africa have reached a death toll of 44 people.

Spain has begun negotiations with eurozone partners over the requirements necessary to lower its borrowing costs, but has stopped short of requesting an official bailout.  The strategy currently in favor includes a combined attack by the European rescue fund (EFSF) and the European Central Bank (ECB) purchasing Spanish debt in the primary and secondary markets.  Spain’s borrowing costs are at record levels since the launch of the euro 13 years ago.  “Negotiations have started and are well under way. Right now the preferred option, the one that is being actively discussed, is for the EFSF to buy bonds on the primary market and for the ECB to buy bonds on the secondary,” one of the sources told Reuters on condition of anonymity.

Concerns over Europe and its debt situation are dragging on US stocks, with the S&P 500 heading to a weekly decline. “People aren’t willing to invest,” said Stephen Hammers, the chief investment officer at Compass EMP Funds. “If Europe gets worse, U.S. investors will see that as a warning sign.”  Adding to the concern are comments from German Finance Minister Wolfgang Schaeuble stating that giving Greece more time would not solve its problems and cost investors.

At 1:00 p.m. (EDT), the APMEX

Precious Metals spot prices were:

  • Gold, $1,674.00, Up $35.00.
  • Silver, $30.72, Up $1.08.
  • Platinum, $1,557.70, Up $30.20.
  • Palladium, $657.50, Up $27.30.
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Is the euro currency already dead?

 

Precious metals recovered from early losses this morning after the release of the Consumer Price Index showed the smallest year-over-year increase in nearly two years.  The better-than-expected report could support the Federal Reserve’s looming decision on another round of monetary stimulus.  Also, a key business gauge contracted unexpectedly for the first time in nearly a year.  The “Empire State” index showed a drop to minus 5.85 from 7.39 last month.

Quantitative easing (QE) from either the European Central Bank (ECB) or the Fed seems to be the key factor in a rally for the price of Gold.  Should either central bank announce a round of QE, prices are likely to increase due to the results of such action all being supportive of the Gold price.  Investors shouldn’t be surprised to see action from Europe before the U.S., however.  London’s Marex Spectron said in a note, “The eurozone appears to continue to struggle, while the U.S. keeps surprising the market with positive figures.  This only enhances the chance the the ECB is more likely to act before the Fed.”

Matthew Lynn of Marketwatch writes that the euro as a currency is much like a zombie.  He writes, “Some countries can’t use the euro for imports because of fears that drachmas or lire may suddenly replace euros.”  Lynn explains that oil traders, for instance, may be wary of selling oil to a country like Greece, because when payment is due six months down the the road, they may not be paying in euros, but in something worth far less.  “When a currency stops working the damage done to the economy is immediate.  Trade stops flowing.  Investment gets postponed.  Capital flees.  Very quickly, unemployment starts to rise, and output declines.  That is exactly what is happening in the eurozone right now,” he writes.

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

  • Gold, $1,601.10, Up $0.20.
  • Silver, $27.92, Up $0.05.
  • Platinum, $1,398.70, Down $1.50.
  • Palladium, $577.90, Down $2.00.

 

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Will European Central Bank Take Action?

 

Precious Metals prices continue to trade mixed, as many investors are still waiting to see what (if anything) the European Central Bank does this week. “Uncertainty is growing regarding the outcome of the ECB meeting Thursday. In this context, the Gold market may trade largely sideways ahead of the meeting,” said BNP Paribas analyst Anne-Laure Tremblay said. “However, given the publication of U.S. nonfarm payrolls on Friday, any market reaction to the ECB meeting may prove short lived,” she said. While the U.S. Federal Reserve is also meeting this week, most analysts are of the opinion that it will not take any immediate action.

German Chancellor Angela Merkel’s coalition government has rejected issuing a banking license to the European Stability Mechanism (ESM). If permitted, it would provide the ESM access to increased liquidity via the European Central Bank, and proponents contend that might lower borrowing costs. All three parties of Merkel’s coalition have issued statements against the license. “Those who try to circumvent their own rules through the back door lose their legitimacy in the eyes of the public,” said Hans Michelbach of the Bavarian Christian Social Union. “Financing debt by means of the printing press leads to growing inflation dangers.”

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

  • Gold, $1,615.50, Down $6.10.
  • Silver, $28.06, Down $0.07.
  • Platinum, $1,417.10, Up $5.30.
  • Palladium, $590.90, Up $1.80.

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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Two concerns for the eurozone: It’s currency and it’s future

 

Gold’s price has maintained a slow increase today as the main focus continues to be how the Federal Reserve plans to rebuild the U.S.A. financial system.  Matt Zeman at Kingsview Financial said, “It is all going to ride on central-bank action this week.  Markets were quiet as traders were waiting to see whether the U.S. Federal Reserve and the European Central Bank will announce any measures when they meet this week.  This is a market that seems to want to go higher,” Zeman said of gold. “The Fed and the ECB could throw some wild cards in there but it looks like it will go higher” in the following days, he added.

Investors are presuming the European Central Bank (ECB) may reveal more clues Thursday (as it announces its most recent interest rates) about potentially restarting its notorious bond-buying program, or they may follow America’s famous stimulus choice: quantitative easing.  ECB President Mario Draghi said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.  And believe me, it will be enough.”

There is growing concern for what the future holds in the eurozone regarding its 2 ½ year debt crisis.  Unfortunately the answers are hard to find with politicians working around the clock to compile a successful plan. Peter Vanden Houte, an economist at ING, seems to have little confidence in Europe as he said, “As long as consumer and businesses continue to question the solidity of the monetary union, there’s little hope to see an upturn before long.  Today’s dismal figures only increase the pressure on European policy makers to act decisively to stop the rot in the euro zone.”

At 5:00 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,623.30, Up $3.00.
  • Silver, $28.24, Up $0.65.
  • Platinum, $1,418.70, Up $10.50.
  • Palladium, $589.00, Up $16.10.

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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Time to sound the alarm with Spain?

Precious metals have been generally even to climbing through early morning trading. Investors are wary of world events and slowly re-establishing their safe haven mentality in regards to global and domestic economic situations. The FOMC is set to release a statement tomorrow, which analysts feel are corralling prices for now. Analyst Lynette Tan said, “Ahead of the FOMC meeting, gold bugs will watch for signs of more quantitative easing or an extension of Operation Twist when it ends this month. A failure to confirm more asset purchase or the like could see gold dropping again. For the moment, we expect policy decisions from the Fed to influence gold price more than risk appetite linked to the euro crisis.”

Is it time to sound the alarm on Spain? That’s the question facing the global community, with a call for help so far falling on deaf ears, but is readily apparent in the debt sale attempts. German Chancellor Angela Merkel continues to compromise, but the firm line in the German sand is not sharing the burden with the euro bonds. Spanish Treasury Minister Cristobal Montoro has asked the ECB for its help. However, the ECB continues to put the onus of responsibility on the countries themselves. Spanish Economy Minister Luis de Guindos said, “We think … that the way markets are penalizing Spain today does not reflect the efforts we have made or the growth potential of the economy. Spain is a solvent country and a country which has a capacity to grow… I don’t think things look catastrophic for Spain as eventually some solution will have to be found, or the ECB will have to step in again. It’s in no one’s interest to see Spain bailed out, because then there will be questions as to whether there are enough funds, and questions over Italy.”

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

  • Gold – $1,630.70 – Up $3.20.
  • Silver – $28.85 – Up $0.08.
  • Platinum – $1,489.30 – Up $3.20.
  • Palladium – $634.30 – Up $0.10.
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