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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Weekly Gold and Silver Market Recap for May 25, 2012

by John Foster. Email John.

Golden Range?:

Concerns out of the Euro zone continued to pull down the euro and strengthen the American dollar this week, thus pulling down prices. Gold in particular has remained relatively fluid within a certain price range of $1,530 to $1,590. However a key price indicator in the short term continues to be $1,600 an ounce. However, euro pressure continues to be in the driver’s seat for prices. An unidentified international dealer said, “If we break above $1,600 and even go higher to confirm the bull trend, we will see more buying.”  Gold’s price drop has been well documented during the past few weeks. Many factors have led to the shift in price. However, in the view of many investors, this is an opportunity, based on a closer look at the numbers. CNBC contributor Dennis Gartman said, “The public is massively bearish, and that tells me it’s time to be bullish.” He added, “Most people don’t think Gold and stocks can go higher together, but I expect to see them trade dramatically higher over the course of the next several months. The trend is now higher.”  Prices of Precious Metals were boosted by news of purchases from the biggest of spenders. Central banks in Turkey, Ukraine, Mexico, and Kazakhstan increased their Gold holdings in April, according to the International Monetary Fund. Commerzbank AG said, “We regard the central banks as a stabilizing element on the Gold market and anticipate increasing buying of Gold.” Lachlan Shaw of Commonwealth Bank of Australia said that early signs of an American recovery, a slowdown in Chinese growth, question marks over United States monetary policy and a sovereign debt crisis brewing in Europe are all keeping the market in a wait and see mode. “Any of these four catalysts can drive prices and investment demand,” he said.

U.S Slow but Steady?:

The United States might experience slower economic growth than previously expected with the end of extended benefits for the unemployed. This might influence some job seekers to accept jobs they otherwise would prefer not to, or give up searching for a job and drop out of the labor force. Andrew Tilton at Goldman Sachs Group Inc. is optimistic about the end of the extended benefits program. He said, “There has been an improvement in the availability of jobs. In a better labor market, people losing their benefits would be more likely to look and to find a job, and less likely to simply drop out.  However, consumer sentiment in the United States rose to its highest point in more than four years in May. Optimism in the air as a healthier economy is beginning to develop. Richard Curtin, head of the University of Michigan’s consumer survey, reflected on how long the consumer sentiment will remain positive. He said, “The most likely prospect is that job growth resumes at a modest pace and that confidence remains largely unchanged until after the November election and decisions about tax policy are made.” Despite the upheaval in Europe, the United States’ economy continues to push forward. There is concern the debt problems in Europe and China could affect American factory data soon, with the Purchasing Managers Index slowing from 56.0 in April to 53.9 this month. Paul Edelstein said, “We are growing at moderate pace of two to two-and-a-quarter percent, but we have some headwinds that are starting to assert themselves, particularly coming from Europe.” Continue reading

Tuesday Links: Gold rises

Precious Metals

Euro, stocks rise on earnings, solid debt sales (Reuters)

Mexico Raised Gold Reserves in March, IMF Data Shows (Bloomberg)

Prices, inflation dent gold demand on Akshaya Tritiya (Reuters)

Markets

US Stocks End Mostly Higher After Blue-Chip Earnings; Nasdaq Slumps (WSJ)

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