Gold & Silver Prices Slightly Off in Morning Trades

Markets continue to monitor news coming out of the euro zone. Greece wants a new deal with less austerity, but there are no signs Germany is willing to give in. Of course, Greece is not the only problem. Investors will watch Spanish banks for any signs of additional weakness. There are those who are concerned there could be runs on the banks.

Euro zone leaders will meet informally in Brussels this week and French President Francois Hollande is expected to propose the idea of a Eurobond. A Eurobond would be jointly underwritten by all euro zone members. Germany is reluctant to support such a measure until other member states have their financial houses more in order. If these bonds were to written, it would place Germany in a position of financing the debt of other states.

The leaders of the G-8 met over the weekend at Camp David. They all agree that Greece should stay in the euro zone and they all agree “on the importance of a strong and cohesive euro zone for global stability and recovery.”

The continued uncertainty in Greece has caused the euro to give up the small gains it had achieved against the dollar. This largely accounts for the weak openings for gold and silver.

At 9AM EST the APMEX precious metal prices were:

  • Gold price – $1,589.20 – down $4.20
  • Silver price – $28.31 – down 48 cents
  • Platinum price – $1,461.80 – up 50 cents
  • Palladium price – $613.30 – $7.70
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Gold Ends Higher for the First Day in Five

After closing lower for four consecutive trading days, gold prices rebounded today after hitting a 10-month low.

Oil prices continued to decline today, providing some welcome relief to American consumers. “We had soft economic data and European concerns weighing on equities and oil is being pulled along lower,” said Jason Schenker, president of Prestige Economics LLC. “Elevated concerns about the European story and disappointing U.S. economic data have been the story for two weeks now.”

Moody’s is set to announce downgrades of several Spanish banks this evening. According to a source with knowledge of the issue, the key reasons for the downgrades are rising loan defaults, a renewed recession, restricted funding access and the reduced ability of the government to support lenders. The Spanish newspaper El Mundo reported yesterday that customers of the Spanish bank Bankia SA had withdrawn more than 1 billion euros from the bank since the government announced it was taking over the bank on May 9. Bankia SA and the Spanish government denied that a bank run was underway, but markets hammered Bankia’s share price nonetheless.

Ahead of tomorrow’s G8 summit at Camp David, Barack Obama is urging European powers to ease austerity policies and adopt a growth strategy. The newly elected president of France, François Hollande, is expected to support Obama’s argument. Hollande defeated incumbent Nicolas Sarkozy by campaigning against austerity measures, which are deeply unpopular in some European countries.

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

  • Gold – $1,575.20 – Up $37.10.
  • Silver – $28.08 – Up $0.80.
  • Platinum – $1,454.00 – Up $19.80.
  • Palladium – $604.00 – $7.90.
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Eurozone fears permeate the precious metals market

Precious metals have remained relatively steady in overnight trading. Physical demand and better than expected German data helped maintain prices during overnight trading, but there continues to be concern over Greece’s role and whether or not it will stay in the euro that adds to the volatile currency market. Marex Spectron said, “When German GDP came in at 0.5 percent, a lot higher than expected, the subsequent rally in the euro gave rise to a quick 10-dollar short covering rally in gold.” However Gold’s rebound is viewed as a likely scenario as Pradeep Unni said, “(Gold’s) safe haven status has been tarnished… It will wobble on the euro’s weakness, but in a very short term, bargain hunting and pent-up demand will emerge taking it higher.”

The push for austerity in Greece remains in place regardless of the pleas from Alexis Tsipras, who boycotted a bargaining meeting yesterday in support of his views. The talk of Greece leaving the euro is not viewed as a realistic option. However, the failure of the Greek government to form a unity government after its most recent elections continues to adversely affect European markets. Marchel Alexandrovich said, “The euro breakup story is gathering steam again… If Greece were to ever exit the euro, no amount of reassuring comments will convince investors that other countries won’t soon follow.”

Francois Hollande is to be sworn in as French President later today. Once sworn in, he is expected to fly to Germany to meet with Chancellor Merkel for the first time. The meeting will be closely monitored due to their disparate views and Merkel’s very public support of Hollande’s challenger Nicolas Sarkozy. Carsten Brzeski said, “In our view, what currently looks like a clash between growth-fanatics and austerity-fetishists will eventually end in a good European compromise with something for everyone: The fiscal compact and the medium-term goal of balanced budgets should remain intact, but complemented by a new growth compact with European funds and initiatives.” Erwin Grandinger said, “I think it’s the first kick-off meeting to repair personal relations between Hollande and Merkel. Merkel had done something extremely unusual. She took sides in the presidential elections.” Hollande has supported pro-growth sentiments, while Merkel has had a pro-austerity position.

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

  • Gold – $1,559.90 – Down $2.50.
  • Silver – $28.28 – Down $0.14.
  • Platinum – $1,450.40 – Up $6.80.
  • Palladium – $603.50 – Up $7.60.
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