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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ECB announcement, Fed meeting disappoints markets

 

ECB ANNOUNCEMENT, FED MEETING DISAPPOINT MARKETS

American stock futures gave up some early gains after the European Central Bank (ECB) announcement that eurozone interest rates will remain the same.  While many economists believed that would be the case, it seems investors were hoping for more than that.  ECB President Mario Draghi, during a press conference, reinforced his commitment to the euro, stating that it is an “irreversible” union.  He also called to governments, saying they need to “stand ready to activate bail-out funds.”  Stock futures and Precious Metals moved into the red as Draghi spoke.

The Federal Reserve said yesterday that actions would be taken to stimulate the economy.  Yesterday’s drop in Gold’s price was the biggest in more than three weeks, and was largely due to the lack of announcement by the Fed.  However, buying of Gold by central banks is still supporting the Gold price.  UBS said in a note, “[Central bank buying] has been providing investors with some comfort, that stronger hands are active.”

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

  • Gold, $1,598.40, Down $6.50.
  • Silver, $27.32, Down $0.32.
  • Platinum, $1,394.00, Down $7.30.
  • Palladium, $576.40, Down $7.20.

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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Two concerns for the eurozone: It’s currency and it’s future

 

Gold’s price has maintained a slow increase today as the main focus continues to be how the Federal Reserve plans to rebuild the U.S.A. financial system.  Matt Zeman at Kingsview Financial said, “It is all going to ride on central-bank action this week.  Markets were quiet as traders were waiting to see whether the U.S. Federal Reserve and the European Central Bank will announce any measures when they meet this week.  This is a market that seems to want to go higher,” Zeman said of gold. “The Fed and the ECB could throw some wild cards in there but it looks like it will go higher” in the following days, he added.

Investors are presuming the European Central Bank (ECB) may reveal more clues Thursday (as it announces its most recent interest rates) about potentially restarting its notorious bond-buying program, or they may follow America’s famous stimulus choice: quantitative easing.  ECB President Mario Draghi said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro.  And believe me, it will be enough.”

There is growing concern for what the future holds in the eurozone regarding its 2 ½ year debt crisis.  Unfortunately the answers are hard to find with politicians working around the clock to compile a successful plan. Peter Vanden Houte, an economist at ING, seems to have little confidence in Europe as he said, “As long as consumer and businesses continue to question the solidity of the monetary union, there’s little hope to see an upturn before long.  Today’s dismal figures only increase the pressure on European policy makers to act decisively to stop the rot in the euro zone.”

At 5:00 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,623.30, Up $3.00.
  • Silver, $28.24, Up $0.65.
  • Platinum, $1,418.70, Up $10.50.
  • Palladium, $589.00, Up $16.10.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CDT)! Or call us Fridays until 5 p.m. (CDT)! 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 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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Strong euro continue to boost Gold

 

Gold is holding on to morning gains following comments by the president of the European Central Bank, which have buoyed the euro for a second day. “You’ve got a rise in the euro, which means a weaker dollar, and a ‘risk on’ environment, so everything that looks like a risky asset goes up. Gold has been trading just like a commodity (lately) and is behaving like one today,” Natixis analyst Nic Brown said.

European Central Bank President Mario Draghi has stated that as part of the ECB’s effort to protect the survival of the euro, it will be buying Spanish and Italian government bonds. This move also is believed to help lower borrowing costs. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said at an investor conference in London. “And believe me, it will be enough.”

Business investment is looking to be cooler in the second half of the year, as orders for business equipment dropped in June. Lower American consumer spending and overseas demand have many companies delaying replacing equipment. “Business investment has definitely shifted lower,” said Tom Porcelli, chief United States economist at RBC Capital Markets LLC in New York. The European debt crisis and the looming “fiscal cliff” will “put downward pressure on orders, which will translate into weaker growth in the U.S.,” Porcelli said.

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

  • Gold, $1,615.90, Up $5.80.
  • Silver, $27.58, Up $0.02.
  • Platinum, $1,404.60, Up $5.20.
  • Palladium, $570.90, Up $4.60.

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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