Precious metals, although higher today, are still experiencing a lot of volatility

Precious metals, although higher today, are still experiencing a lot of volatility through the day due to concerns growing over the eurozone debt crisis. Though risk remains elevated in the eurozone gold is holding steady. Domestic and sovereign concerns are hinged on central banks’ offerings of support. Analyst David Wilson said, “(Federal Reserve Chairman Ben) Bernanke, in comments made to the Congress committee last week, seemed to be intimating that QE was off the table… But I wonder (whether) if Europe continues to drag, the likelihood of QE continues to grow… That in itself should be supportive for gold.” Meanwhile in a note to investors Commerzbank wrote, “So far the financial aid promised to Spanish banks has failed to have its desired effect. On the contrary, the sell-off of Spanish and indeed Italian government bonds continues… The sovereign debt crisis can be expected to keep the markets on tenterhooks for quite some time yet and cause demand for gold to pick up again — not only among retail investors.”

Alex Tsipras is still viewed as a front runner in this weekend’s Greek elections. He also feels that the European Union does not want to kick Greece out, even after repealing the austerity measures inflicted for the bailout the country has already received. He said, “We have no sense that European partners will follow this tactic of blackmail heard from some quarters and stop funding… Something like that would be catastrophic not only for Greece but for the entire euro area… We want to simply convince our partners that it’s in the interests of all to stop sending EU taxpayers’ money into a bottomless pit. This money should be used properly in a program that is effective and not on a memorandum that has failed.” The Greek people are making a run on the banks ahead of these elections, causing more of an economic strain on an already tenuous situation. Tsipras spoke to this topic as well when he said, “To stop these outflows, this hemorrhage from the financial system, it is imperative to have support from all political sides that we’re working to stabilise the Greek economy. This scare-mongering on Greece leaving the euro must stop.

At 5:01 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,618.10 – Up $4.30.
  • Silver – $28.88 – Down $0.17.
  • Platinum – $1,466.00 – Up $9.60.
  • Palladium – $618.80 – Down $5.50.
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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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Bullish investors waiting for Gold trigger

Gold has moved off its morning gains today, as another sharp drop in the euro’s value has investors looking to the United States dollar.  Issues with the Spanish banking system, a spike in Italian borrowing expense, and the upcoming Greek elections have fanned the flight to the safety of the dollar. But American economic data is starting to disappoint, with increases in new jobless claims and a sharp drop in the Midwest business activity index, which could open the door to a new round of easing. “If we had momentum upwards, there are still plenty of people who are bullish and who would buy into that. But at the moment, you have pressure from a strong dollar, or perhaps more accurately a weak euro, and people are just a little bit wary. That doesn’t alter the fact that there are plenty of bulls out there. They are waiting for a trigger to send the price higher. And the question is, what’s that trigger?” said David Jollie at Mitsui Precious Metals.

Today’s drop in U.S.A. stocks has the Dow Jones industrial average on pace to finish May with a loss, which would be its first loss in the past eight months. Worries over the European Union and its economies added to troubling employment numbers. “It’s the summer months, unfortunately, so that’s one strike. And everyone is out hunting for black swans and finding them. It’s a strange environment where investors just don’t trust the market at all, so the question is how cheap do stocks have to get before they can entice investors again,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

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

  • Gold, $1,569.10, Up $3.90.
  • Silver, $28.10, Up $0.03.
  • Platinum, $1,420.80, Up $17.60.
  • Palladium, $613.00, Up $7.30.
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The Week So Far in Pictures

Sunday

Elections in Greece and France show a lack of acceptance of needed austerity measures designed to keep the countries solvent.

Monday

India removes Excise tax on Gold Jewelry

Tuesday

Precious Metals starts trading lower as concerns over the eurozone debt crisis, change in French leadership and uncertainty in Greece put strong pressure on the euro.  The drop in euro saw a rally in Treasuries and the dollar. At 5 PM ET on Tuesday, APMEX Gold Spot price closed at $1,606.90 down $33.20

Wednesday

As the value of the American dollar continued to climb today on Europe’s fiscal worries, it pushed the Gold price down for the day. Silver fell to its lowest price since January.

30 day Silver Chart from www.APMEX.com

Thursday

We see the end of a three-day losing streak on Gold. Easing concerns over the Spanish debt market and Greece securing funds needed for bond payments strengthened the euro. The past week, we have seen Gold prices fall to 4-month low.

30 day Gold Chart from www.APMEX.com

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