More European Countries Added to Worry List

Precious metals prices have remained relatively steady, rising a bit during early morning trading. Some analysts feel that the safe haven appeal of gold is borne not of the eurozone worries themselves, but actually what those worries could do to the U.S. economy. According to analyst Nic Brown, “Gold is sitting waiting for something to happen, but I would argue it is waiting for something to happen in the United States, rather than Europe. (We need) more clarity in the United States over whether the economic data is going to improve again…or whether the weakening data is a sign of slower economic growth, and that therefore the Fed will have to do something. For me, the focus is definitely on the U.S. side of the Atlantic. In the meantime, gold is going up, down or sideways dependent on what is going on in the euro/dollar rate, and there isn’t a great deal else that is moving it around.”

In an interesting turn of events, outspoken Austrian finance minister Maria Fekter put Italy right back in the eurozone spotlight with Spain. However, Italy does not have near the exposure that Spain does considering its much lower unemployment rate and lack of banking exposure to the real estate crisis. In Fekter’s opinion, “Italy has to work its way out of its economic dilemma of very high deficits and debt, but of course it may be that, given the high rates Italy pays to refinance on markets, they too will need support.” Meanwhile Italian Prime Minister Mario Monti called her remarks “completely inappropriate.” The nation of Cyprus could also be looking for a bailout, becoming the fifth country to make that request, with its own banking issues bringing the need to light.

At 9:01 a.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,604.80 – Up $7.80.
  • Silver – $28.93 – Up $0.23.
  • Platinum – $1,446.50 – Down $4.80.
  • Palladium – $624.00 – Down $1.60.
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Gold price holding stady; China looks to increase holdings

The Gold price has been steady today after last week’s drop in price. The well documented economic crisis in Europe has the market in a holding pattern until further news warrants movement. There has been much talk of how the yellow metal is being affected by global issues, however those issues may not be the strongest influence of late. “While commentators spend much time talking about how Gold is being influenced by the risk to the global financial/banking system from euro troubles, Gold seems to be primarily tracking one trend, namely the trend in the U.S. dollar,” Citi said in a note.

The focus of European economic trouble seems to be on Spain. While the issues with Greece and Italy have been well documented, the issues with Spain are maybe even more complex. Spain has historically been a strong economic force in Europe. Spain’s banking system has been seen as well managed, unlike those in Greece and Italy. Dr. Peter Morici of the Robert H. Smith School of Business said, “Simply, Spain’s resort industry, home values and banks are collateral damage of the wider global crisis and European recession. Indeed, the IMF, in a detailed report published on May 30, found the core of Spanish banking sound, regulation generally effective, and needed restructuring well under way.”

China has taken notice of the financial issues in Europe and is looking to Gold for diversity. “Investors here want to hold part of their assets in Gold to hedge for the risks, especially now that the financial crisis has evolved into a sovereign crisis,” Zheng Zhiguang, general manager of the Precious Metals department at Industrial and Commercial Bank of China Ltd., said in an interview in Shanghai. Gold demand was 13 percent higher in the first quarter of this year compared to 2011.

At 1:02 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,593.00, Up $1.60.
  • Silver, $28.56, Unchanged.
  • Platinum, $1,450.90, Up $23.80.
  • Palladium, $625.60, Up $13.60.
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Housing and eurozone boost Gold’s safe haven appeal

Precious metals prices have been on quite the journey today, but as the eurozone issues continued to simmer and the disappointing domestic housing data was released, the early morning losses were replaced with gains throughout the

stock market

stock market (Photo credit: 401K)

mid-day and afternoon. Portfolio manager James Dailey said, “This morning’s reversal is indicative that people are starting to come to grips with the fact that there isn’t any fast and easy solution in Europe. And if things start to really get out of hand in Spain and Italy, that means gold can catch a bid.” Platinum price was also down with other industrial metals due to economic concerns.

The news out of the eurozone still involves Greece, but has really picked up with concerns building for Spain. Spanish banks continue reeling over the burst property bubble and flailing stock markets surrounding the banking sector. EU Economic and Monetary Affairs Commisioner Olli Rehn has offered a couple of options for the Spanish government to consider, including another year to work out a solvent budget or direct financial aid to distressed banks. In a move of concern the U.S. Treasury sent top official Lael Brainard to speak with Greece, Germany, Spain and France.

Domestic stock markets fell on disappointing housing data, Greece’s future in the euro currency and the solvency of Spanish banks. Overseer Hayes Miller said, “It’s a high-anxiety market… We’re not anywhere near the end of Europe’s debt crisis. In the U.S., economists are making the point that if housing were to stabilize, consumption could grow. The question is: what’s going to allow the housing market to stabilize?”

At 5:05 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,563.60 – Up $13.10.
  • Silver – $27.97 – Up $0.09.
  • Platinum – $1,402.60 – Down $27.50.
  • Palladium – $608.00 – Up $2.00.
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