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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