Merkel backs euro, may not back Greece

 

U.S. stock futures received a boost this morning, thanks to German Chancellor Angela Merkel.  Overnight, Merkel reaffirmed Germany’s commitment to the euro, much like what European Central Bank president Mario Draghi said recently.  “With Merkel voicing her support for Draghi’s plans and restating that all measures would be taken to defend the euro, investors are breathing a sigh of relief this morning,”” said Mike McCudden of Interactive Investor.

Speculation that a Greek exit from the eurozone is building today, as Greek Prime Minister Antonis Samaras is scheduled to meet with Merkel today and French President Francois Hollande Saturday.  Recently, there has been talk of Greece seeking to extend their austerity program over four years instead of the originally-agreed-upon two years, which may not sit well with Germany and France, who are reportedly finished compromising with Greece.  Samaras and his political party promised this extension during elections in Greece, and not being able to obtain it may cause further political issues in the country.

Gold and Silver prices have recovered from slight early morning losses on Merkel’s pledge to the euro.  Nick Tevethan of ANZ in Singapore said, “The (Gold) market is still moving on changing expectations of central bank actions, and is so far unwilling to push prices out of the $1,590 to $1,630 range.”  The Federal Reserve’s Jackson Hole, Wyo. meeting at the end of the month is likely to send Gold out of that range.

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

  • Gold, $1,618.90, Up $1.20.
  • Silver, $28.35, Up $0.03.
  • Platinum, $1,458.50, Up $22.30.
  • Palladium, $595.30, Up $10.30.

 

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America waits for further stimulus; how are investors measuring the euro

 

Gold fell slightly today with investors taking their earnings after last week’s gains, which was encouraged on the assumption that central banks will provide additional stimulus actions.  “Everybody seems to be waiting for this huge money printing that they think is going to happen which hasn’t happened yet. So, nobody really wants to bet against it, but at the same time they don’t want to go long,” said Doug Roberts, chief investment strategist at Channel Capital Research.

As the European debt crisis continues, it is evident that Europe’s foundation is ultimately taking care of the peripheral countries that have more or less had to be bailed out by the troika of the European Central Bank, International Monetary Fund and European Commission.  The concerns are beginning to rise as the growth numbers for France and Germany are slipping.  Also, for the months of May and June, Germany’s factory orders fell by a disturbing 1.7 percent compared to the forecasted 0.8 percent.  Gerard Lyons, chief economist at Standard Chartered, told CNBC.com. “In the good times, the euro encourages money to go from the core to the periphery, creating booms and busts. In the bad times, it encourages money to go the other way and increases the liabilities of the core.  The euro is a fundamentally flawed concept, and that’s why the core is facing greater challenges. The core can’t cut themselves off completely from the periphery and that’s what markets are responding to.”

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

  • Gold, $1,610.60, Down $10.70.
  • Silver, $27.87, Down $0.31.
  • Platinum, $1,388.50, Down $12.40.
  • Palladium, $574.50, Down $9.20.

 

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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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Precious metals rally on quantitative easing talks domestically, as well as internationally

 

Precious metals rally on quantitative easing talks domestically, as well as internationally. Gold in particular is continuing its upward movement as a result of the easing talks. Commodities manager Jeffrey Sherman said, “The gold market has been looking for any hints of any quantitative easing program. You are seeing this big bounce today off the fact that there could be something going on in euroland.” The ECB is potentially going to create new money to help sovereign bailouts within the eurozone, a potential boost to gold prices.

New home sales have fallen, creating a bit of a setback to the nominal housing market recovery. The drop was primarily due to a huge setback in the northeast. Economist Yelena Shulyatyeva said, “Housing will continue to recover gradually throughout the year, but fundamentals are not supportive of a fully fledged housing market recovery.” Meanwhile, fundamental data still suggests a marginal recovery as economist Joel Naroff said, “It is hard to believe that the market is turning downward when the home builders’ confidence index jumped in July to its highest level in over five years. Either developers are clueless or the data have yet to catch up with reality. I am on the side of the latter.”

Meanwhile concerns continue to grow over eurozone debt fears as a number of high ranking officials and even prime ministers are set to hit the European holiday season. After issuing a statement yesterday blasting bond traders for driving up Spain’s borrowing costs, Germany’s Finance Minister Wolfgang Schaeuble is now on a three week vacation. However, Germany’s Schaeuble and Prime Minister Angela Merkel are supported by gains in German bunds markets. The top two German officials’ vacation plans have investors looking elsewhere for crisis management.

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

  • Gold, $1,605.30, Up $27.10.
  • Silver, $27.39, Up $0.49.
  • Platinum, $1,400.40, Up $13.80.
  • Palladium, $566.00, Up $3.40.

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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Gold Bounces Back Along with the Euro

 

Gold is recovering from recent losses along with the euro this morning. A policymaker from the European Central Bank hinted that Europe’s rescue fund could get a banking license, allowing easy access to cheap funding from the ECB. While just a small mention from one policymaker, it has been enough to snap a five-day losing streak for the euro.

Germany, which has long been the strong point in the eurozone, is starting to feel the heat from the rest of the eurozone, said Mike Jones of Bank of New Zealand. Jones said, “The economic weakness in Europe is spreading from the periphery to Germany. Even the engine of European growth is starting to lose steam, and that’s undermining European sentiment.”

The United Kingdom is also in a bad spot. Nick Parsons of National Australia Bank in London said that, by the end of the year, he expects an interest rate cut in the country and “more quantitative easing is going to be needed.” The U.K.’s economy shrank more than expected in the second quarter, showing that Britain has “deep-rooted economic problems,” Finance Minister George Osborne said.

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

  • Gold, $1,602.40, Up $24.60.
  • Silver, $27.34, Up $0.44.
  • Platinum, $1,403.60, Up $17.00.
  • Palladium, $567.60, Up $5.10.

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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