Gold waits on Central Bank meetings

 

The Gold price has started the week in a holding pattern. After last week’s significant climb of more than 2 percent, the yellow metal is waiting for a signal from the central banks in Europe and the United States this week to determine a course of action. Most expect European Central Bank President Mario Draghi to deliver on a promise he made last week of doing “whatever it takes” to save the euro. If he doesn’t, some believe it could have serious repercussions. “The market will be very disappointed if Draghi doesn’t deliver,” Commerzbank analyst Daniel Briesemann said. “The expectations for the upcoming ECB meeting are very high, and he must say something really significant. If he fails to do so, we will probably see lower commodity prices across the board, due to a stronger U.S. dollar.”

In the United States, the theme of the Federal Reserve discussions continues to be a third round of quantitative easing to help further stimulate the economy. In Europe, there is now talk of a round of easing for that region. The European Central Bank is to announce a decision Thursday regarding its future plan of action. While it is not believed there will be any drastic measures such as monetary easing happening this week, it is expected some action will be taken. That may come in the form of restarting the controversial bond purchasing program or more action on interest rates. Not all members of the European Union agree with such measures. The president of one of Germany’s largest banks is one of them. “The mechanism of bond purchases is problematic because it sets the wrong incentives,” a spokesman for Bundesbank President Jens Weidmann told Reuters.

As the Precious Metals markets await cues from the central banks, so does the stock market. “You won’t get movement either way; the market just has to catch up with itself,” said Ken Polcari, managing director at ICAP Equities in New York. “That being the case, certainly everyone thinks that Europe is going to come out with this big bazooka, and they also think the Fed will launch, so therefore the market is going to stay up here.”

At 1:03 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,619.70, Down $0.60.
  • Silver, $28.10, Up $0.51.
  • Platinum, $1,411.60, Up $3.10.
  • Palladium, $589.40, Up $16.50.

 

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Weekly Gold and Silver Market Recap for May 4, 2012

by John Foster. Email John.

Manufacturing Jobs?:

After a rough week Gold looks to at least close the week on an uptick.  The release of April’s employment report by Automatic Data Processing Inc. report showed that the economy added 119,000 jobs in April, while economists had anticipated the addition of 160,000 jobs. The unemployment rate fell by one-tenth of a percent, to 8.1 percent, but that was attributed completely to people who gave up searching for jobs. Stock futures fell after the report was released.  Manufacturing index numbers beat initial estimates in a report this week, climbing to 54.8 percent for the month of April. This exceeded even the most optimistic estimates. Manufacturing “continues to be a bright spot in the recovery,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York. “We have yet to see a drop-off in foreign demand for U.S. manufactured goods, and that comes despite all the concerns of a slowdown in the global economy.” Continue reading