So What’s Up with the Gold Price?

So What’s Up with the Gold Price? (Resource Investor)

Get Ready for $1,200 an Ounce Gold (The Street)

US sales of new homes rose 3.3 percent in April (AP)

Late rally erases steep losses on Wall Street (AP)

Euro-Zone Leaders Step Up Greece Contingency Plans (WSJ)

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Metals Retreat as Dollar Continues to Climb

Currency markets pushed the American dollar higher amid dim hopes for a European solution. Kevin Hebner, a foreign-exchange strategist for JPMorgan in London, wrote to clients today, “For the second time in six months, Greece’s Economic and Monetary Union exit seems imminent.”  Fears of a breakup of the eurozone have been driving down the value of the European currency for the last few weeks.  A weak euro bolsters the American dollar, and as a consequence, typically pushes down the price of precious metals and other commodities.

A bit of positive news surrounding the American housing market was released today, indicating an increase in sales of existing homes.  “We’re still a ways from looking at an encouraging picture of the U.S. economy, though when it comes to housing, every little bit helps,” said Camilla Sutton, a currency strategist at Scotia Capital in Toronto.  Overall home values have increased 10.1% from April 2011, but are still about 30% lower than the high-water mark set in 2006.  Diana Olick, a real estate reporter for CNBC cites a reduction in bank foreclosures and distressed sales as the primary driver for the higher prices.

At 4 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,569.10, Down $21.10.
  • Silver, $28.25, Up $0.17.
  • Platinum, $1,448.80, Down $14.70.
  • Palladium, $613.00, Up $0.30.
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Weekly Gold and Silver Market Recap for May 11, 2012

by John Foster. Email John.

Silver Lining in Gold’s Fall:

While gold finished this week down nearly 2% there looks to be some Good news for Gold pricesas a survey conducted by Bloomberg showed that 14 of 32 analysts anticipate prices to gain next week. The Gold price is currently being affected by the political uproar in Europe, which is pushing the euro down, and positive American economic news, which is strengthening the doll

Silver bullion bar 1000oz top view

Silver bullion bar 1000oz top view (Photo credit: Wikipedia)

ar. “When the market gets very nervous, then they buy dollars, and Gold finds it difficult to rally,” said Jesper Dannesboe, an analyst at Societe Generale SA in London. “Given what’s going on in the markets at the moment, any rally will probably just be a bounce before another setback.”  One hedge fund manager is predicting tough times ahead for stocks, which could be positive for gold and silver, considering the negative correlation the metals historically hold to stocks. Referring to the Federal Reserve’s “Operation Twist,” he says that “the Fed has effectively found a way to keep long-term interest rates low … and cleverly engineered another bull rally (for stocks). … The U.S.A. will have to start dealing with issues that some market participants refer to as Taxmageddon.” “Taxmageddon” is the term being given to the coming months before the U.S.A. presidential election, when many decisions on tax breaks are due. Continue reading