Eurozone index indicates upcoming recession

American stock futures and Precious Metals are down this morning, as news out of Europe disappointed investors. The eurozone purchasing managers’ index declined in July, further indicating a recession is likely soon in the region. Rob Dobson, senior economist at Markit, said, “The final August PMI came in only slightly below its earlier flash estimate, leaving the eurozone economy on course to fall back into technical recession in the third quarter.” Dobson said “there is little prospect of a sustained improvement in economic conditions over the near term.”

Eurozone policymakers are set to meet tomorrow, and many investors are expecting a new round of monetary easing in the form of bond purchases. One interesting possible outcome of the eurozone meetings is that if any disappointing news comes out and the markets take a hit, the United States Federal Reserve may be more willing to enact its own quantitative easing measures. Stephen Davies, chief executive at Javelin Wealth Management, added another wrinkle to the story. He said, “We are entering into a strange couple of months because the ability of the Fed to take up much of the slack seems to be quite limited on the basis that they will be quite reluctant to make any major moves ahead of the election, on fear of appearing too partisan.”

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

  • Gold, $1,694.40, Down $0.30.
  • Silver, $32.33, Down $0.08.
  • Platinum, $1,567.00, Down $1.50.
  • Palladium, $643.00, Up $1.50.

APMEX’s Account Managers now have extended hours Mondays through Fridays and are here to serve you until 8 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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Morning Gold & Silver Market Report – 8/10/2012

FALLING IMPORT PRICES COULD LEAD TO MORE QE

Import prices in the U.S. fell unexpectedly in July, extending the streak to four months of declines.  The decline in import prices could be one more reason for the Federal Reserve to ease monetary policy further.  Historically, tools such as quantitative easing have been very supportive of Precious Metals prices.

The possibility of further easing is one of the reasons gold investors are the most bullish in five weeks, according to Bloomberg.  Among the factors supportive of the Gold price are disappointing economic figures out of China and Europe.  Colin O’Shea of Hermes Investment Management Ltd said, “More quantitative easing will certainly be beneficial to commodities (like Gold).  Do you need more QE to drive the market higher?  Probably not.  The demand side of the equation has been pretty robust.”

The strongest economy in the eurozone, belonging to Germany, is inching closer to a recession.  Joerg Kraemer, chief economist at Commerzbank, said, “The German economy is losing momentum – there’s no doubt about that – and in the third quarter the economy will shrink compared to the second quarter.  Things will go downhill from here.  The German economy is not faring as badly as the rest of the eurozone, but it can’t disconnect itself, especially as growth in China has slowed and continues to do so.”

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

  • Gold, $1,616.90, Down $1.80.
  • Silver, $27.85, Down $0.36.
  • Platinum, $1,402.30, Down $11.50.
  • Palladium, $581.00, Down $7.30.

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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Gold Prices Slightly Lower in Overnight Trading

 

 

Gold and equity markets are both poised to advance in the event the European leaders announce a plan to bail out Spain and curb further contagion. Spain has requested further euro zone support in buying its sovereign debt. Germany continues to be resistant to this notion and this does set up a clash of wills as German finance officials prepare to meet with U.S. Treasury Secretary, Tim Geithner. Mr. Geithner has stated that the euro zone crisis is the biggest threat to the U.S. economy, so it is expected he will put pressure on Germany to take additional action.

 

The economic picture in Spain continues to worsen as their recession deepened in the 2nd quarter. Tough new austerity measures were enacted and this did take a toll on overall demand and consumer prices. Consumer prices rose 2.2% year over year. All in all, this paints a difficult picture for Spain to climb out of their budget deficit.

 

European stocks are currently trading higher on the hopes of the European Central Bank stepping in with additional measures, while U.S. stock futures are trading lower as they await potential action.

 

At 9 AM EST the APMEX precious metals prices were:

 

  • Gold price – $1,618.00 – down $2.20
  • Silver price – $27.78 – up 19 cents
  • Platinum price – $1,410.70 – up $2.50
  • Palladium price – $582.50 – up $9.60

 

 

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Credit Outlook Dims for Germany; U.S. Fiscal Cliff Looms

 

Precious metals continue to hold firm in the serious head winds afflicting other commodities markets. Gold in particular has been relatively range bound but in the current market conditions, that’s not an entirely bad thing. Analyst Hayden Atkins said, “Markets sold off really heavily yesterday, and gold held up pretty well against that. It is maybe the one thing that has really stayed solid against some pretty solid headwinds elsewhere.” Meanwhile the issues facing the euro have actually helped Gold in the eurozone as evidenced by Commerzbank’s note to investors which read, “Thanks to the euro’s depreciation vis-a-vis the U.S. dollar, gold in euro terms has been making gains for some time now. Since mid-May an upswing has become evident which in the current market environment should take the yellow metal on a further upward trajectory.”

Meanwhile Moody’s downgraded the credit outlooks of a few of the remaining Aaa rated countries in the eurozone. Those countries are Germany, the Netherlands and Luxembourg. Basically the main countries that would provide assistance to other countries in the region that may need financial assistance. The service released a statement saying, “Moody’s now has negative outlooks on those Aaa-rated euro-area sovereigns whose balance sheets are expected to bear the main financial burden of support — whether because of the need to expand the European Stability Mechanism (ESM) or the need to develop more ad hoc forms of liquidity support.”

U.S. Treasury Secretary Timothy Geithner has already begun speaking towards the potential outcome of kicking the can down the road with the current fiscal situation. In an interview yesterday he said, “Many people who look at this say that, yes, you’d at least get a recession out of this. The cumulative size of those cuts – tax increases and spending cuts – are very, very large relative to the economy.” He also warned that any governmental failure could be quite damaging, relating it to the negative impact of losing the U.S. credit rating last year over debt ceiling talks. He said, “You saw huge damage to consumer confidence, to business confidence, and to confidence around the world in the United States because you had people in public office threatening to default on our nation’s obligations.”

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

  • Gold, $1,579.90, Up $1.00.
  • Silver, $27.06, Down $0.08.
  • Platinum, $1,397.60, Down $1.30.
  • Palladium, $569.40, Down $2.60.

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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