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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ECB president’s comments boost euro, Gold

 

Uplifting comments from European Central Bank President Mario Draghi have boosted the euro for the second straight day, and Gold is following suit. BNP Paribas analyst Anne-Laure Tremblay said that positive news from the eurozone may not be the only thing supporting the Gold price. “Yesterday’s move above $1,600 an ounce was driven by more positive sentiment towards Gold on the back of growing anticipation for QE (quantitative easing). A move above $1,630 an ounce would be the sign of a more durable upward trend,” Tremblay said.

American stock futures are also higher on Draghi’s comments. Miller Tabak strategist Peter Boockvar said, “We’re seeing another instance of central bankers trying to save the day with the threat of their printing machine. Whenever Draghi talks about ‘policy transmission’ being hampered, it’s his Morse code for restarting their bond buying program.” In his comments, Draghi said the euro is irreversible, reaffirming his stance to save the common currency from breaking up.

United States jobless claims historically tend to be volatile in the month of July, and 2012 has been no different. The report today showed a larger than expected drop in new claims, though many economists aren’t sold on the good news. Bob Baur of Principal Global Investors said, “I’m not sure we can see a clean number for another week or two yet. I look at the labor market and see it’s gradually healing, just healing very slowly.  Businesses are reluctant to do anything.” The less volatile four week moving average dropped, as well, and is currently at its lowest level since March.

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

  • Gold, $1,615.60, Up $5.50.
  • Silver, $27.69, Up $0.14.
  • Platinum, $1,411.10, Up $11.70.
  • Palladium, $573.80, Up $7.50.

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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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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Precious Metals prices are down overall this morning

Precious Metals prices are down overall this morning, with gold and silver hovering around one percent lower.  Markets are still reacting to yesterday’s testimony to the U.S.A. Senate Banking Committee by Federal Reserve Chairman Ben Bernanke, who did not give a clear sign that another round of quantitative easing was likely.  David Lennox of Fat Prophets said, “The market was living in hope that he might say a little more than he did.”  The closest Bernanke came to saying anything of note on the topic was that the Fed is “looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market.”

Though there is no official word that more easing will happen, Goldman Sachs said in a recent report that there is a strong possibility it could happen later this year.  Goldman Sachs economist Andrew Tilton said, “While we think that a modest easing step is a strong possibility at the August or September meeting, we suspect that a large move is more likely to come after the election or in early 2013, barring rapid further deteriorating in the already-cautions near-term Fed economic outlook.”

American stock futures are down as well this morning.  Bernanke is scheduled to continue his testimony today, though consensus is that it will draw less interest from the markets.  Housing starts rose to the highest level since October 2008, though the news wasn’t enough to turn around the loss in stock futures.

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

  • Gold – $1,571.60 – Down $19.40.
  • Silver – $27.07 – Down $0.33.
  • Platinum – $1,407.50 – Down $13.20.
  • Palladium – $579.00 – Down $5.40.

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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Weekly Gold and Silver Market Recap for June 6, 2012

by Nicholas Wilsey. Email Robert.

Gold being pulled in different directions:

In the week prior to this one the gold price was riding the high of news of a unified European Union. When Monday started the unification process was clearly going to be a bumpy road and the markets reflected that. However by mid-week talks of a record size stimulus program in Europe raised gold to a two week high. On Thursday and Friday the focus turned to the United States and the job reports. Even with an improvement, the numbers were still low enough to keep most pessimistic. “The Precious Metals bounced strongly when the (payroll) numbers turned out to be below expectations. But after all, the data is a bit mixed: It is not bad enough to suggest the Fed will go ahead with a new round of quantitative easing, but at the same time it is not good enough to exclude it,” said Gianclaudio Torlizzi, a consultant with T-commodity.

Europe continues in economic turmoil:

Over the past few months the news reports out of Europe have created a bleak picture of their financial status. The monthly unemployment numbers for the European Union is at a record high. The unemployment rate is the highest it’s been since the European Union was created in 1999. Compared to the United States unemployment rate of 8.2 percent, the European Union’s rate of 11.1 percent is alarming.  The European Central Bank (ECB) will announce more stimulus measures to buoy a floundering economy in the 17 nation euro currency union. Expectations are that any announcement of stimulus by the ECB would be followed by similar measures from other major central banks. The euro fell to a four week low against the dollar today, held down by a record low interest rate from the European Central Bank

U.S.A. Economy gets mixed reviews

Mixed signals are being sent regarding the future of the American economy. Lowered employment reports and a slowdown of manufacturing activity give reason to believe that America’s recovery has slowed to a stop. However, not all reports have been so negative. Construction spending has risen to its highest level since December 2009. Gary Schlossberg, chief economist at Wells Capital Management, said, “I think it’s interesting that the construction spending numbers do point to the fact that this recovery, such that it is, is being led increasingly by housing, which could provide some support to the economy later in the year.” On the other side is the job report that came out on Friday, where there is not the same optimistic outlook. Jeff Savage, regional chief investment officer for Wells Fargo Private Bank, said, “What a disappointing number. This was kind of disastrous. We’re not even keeping up with demographics at this point. This is not going to be liked in the markets.” Kathy Bostjancic, director of macroeconomics analysis for The Conference Board, is just as optimistic as Savage about America’s economy getting back on track. Bostjancic said, “There is little hope of acceleration in the pace of job growth anytime soon. These conditions are likely to persist at least through the summer and possibly longer.”

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Prediction on QE3 Roll out; S&P Foresees Greece Exiting Eurozone

Today, gold followed the trends of the euro and oil as all three assets clearly began to strengthen.  The safe haven appeal continues to coincide with gold as Jeffrey Sica, at SICA Wealth Management LLC suggested the yellow metal is an essential tool to deal with the global economic worries.  Sica said, “Right now the tools to deal with the European crisis and the U.S. economy are limited and questionable.  So that puts the financial market in a very vulnerable position and enhances the desire to accumulate safe-haven-type investments” such as gold.

Dennis Gartman, the editor and publisher of The Gartman Letter, spoke to CNBC today about the likeliness of the Federal Reserve announcing the next round of quantitative easing (also known as QE3) as early as this month.  Gartman bases his predictions on the latest jobs report that was released Friday with disappointing numbers.  Gartman said, “The Fed has made it abundantly clear that it has kept QE3 up on the table; (it) would be executed if economic circumstances deteriorated.  And you have to admit that Friday’s number — no matter how you try to slice it — was deterioration.”  Gartman also mentioned QE3 will happen far ahead of the U.S.A. presidential election in November so that it is not linked in any political manner to the current administration.

Standard & Poor’s (S&P), one of the big three credit rating agencies, has announced it foresees a one in three chance that Greece will exit the eurozone in the coming months. “ A rejection by Greek voters to enact financial reforms demanded by the European Commission, International Monetary Fund, and European Central Bank would likely result in a cutoff of international aid and subsequent defaults,” S&P said.

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

  • Gold – $1,619.90 – Down $1.70.
  • Silver – $28.30 – Down $0.30.
  • Platinum – $1,430.70 – Down $4.50.
  • Palladium – $612.90 – Down $1.10.
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