End of week report: Gold’s Move Tied To Central Bank Action?

 

Gold’s Move Tied To Central Bank Action?:

Quantitative easing (QE) from either the European Central Bank (ECB) or the Fed seems to be the key factor in a rally for the price of Gold. Should either central bank announce a round of QE, prices are likely to increase due to the results of such action all being supportive of the Gold price. Investors shouldn’t be surprised to see action from Europe before the U.S., however. London’s Marex Spectron said in a note, “The eurozone appears to continue to struggle, while the U.S. keeps surprising the market with positive figures. This only enhances the chance the ECB is more likely to act before the Fed.”  The upward push on Gold is being kept in check somewhat by the mixed United States economic data that suggests the U.S. Federal Reserve will continue its “wait and see” attitude. The Jackson Hole meeting at the end of this month could bring into focus what central banks are planning to do. “After Jackson Hole, the markets will hopefully have a better idea,” said Afshin Nabavi, head of trading at MKS Finance. “Until then, we should continue trading within this range.” A lack of liquidity over the quiet summer months was preventing Gold from moving higher, he said.

Weakening Rupee Hurts Demand:

Physical demand for Gold is taking a hit in India now. That country has been the world’s largest consumer of Gold, in large part due to its high demand for use in jewelry. The two factors that are playing into the softening demand are an increase in import duties and a weak Indian rupee, which drives the local price of Gold higher. Combined with a stronger dollar and weaker euro, the rest of the world is seeing the Gold price hover around $1,600 per ounce. With currency trade on one end and the desire for a safe haven investment on the other, Gold seems to be tugged by both sides at the moment, waiting for a potential announcement on QE from either the United States Federal Reserve or the European Central Bank. India’s festival season has begun and will peak in November. This is a time for weddings and giving Gold gifts.

Mine Violence Sparks Platinum Prices:

Platinum prices have spiked Thursday as a bloody conflict between South African police and striking miners at Lonmin’s Marikana Platinum mine resulted in many injuries and an unconfirmed number of fatalities. The police moved to disperse the estimated 3,000 miners by force after talks broke down with the Association of Mineworkers and Construction Union. Today’s violence caps off a week of fighting that has already seen ten deaths, two of which were police. Lonmin said it had lost the equivalent of 15,000 ounces of Platinum from the six-day disruption, and was unlikely to meet its full-year production target of 750,000 ounces.  Friday saw the confrontation between police and South African miners at Lonmin PLC has escalating, causing Platinum to rise drastically for the second straight day. South Africa produces 75 percent of the world’s Platinum, and concern over its output could spur further gains.

 

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Gold moves with the dollar. Unrest in Syria persists

 

While a strong U.S. dollar continues to put pressure on gold prices, many investors are showing confidence in gold after it fared well during yesterday’s sell off. “Gold is just moving with the U.S. dollar,” MKS Finance head of trading Afshin Nabavi said. “Yesterday, below the $1,570 level, we saw some light physical related interest come in. Today it has been very quiet.” The euro/dollar exchange rate has been a primary driver in day to day movement in gold.

Global unrest adds to the cloud of global economic uncertainty. The Syrian conflict continues to be a source of concern as rebel troops and forces of embattled President Bashar al-Assad continue to clash. US concerns were increased as Damascus has admitted it has, and is willing to use chemical and biological arms in the event of what it calls foreign intervention. U.S. President Barack Obama said the world would hold Assad and his entourage accountable “should they make the tragic mistake of using those (chemical) weapons

At 1:00 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,576.40, Down $2.50.
  • Silver, $26.85, Down $0.28.
  • Platinum, $1,386.80, Down $12.10.
  • Palladium, $562.90, Down $9.10.

APMEX’s Account Managers now have extended hours and are here to serve you until 7 p.m. (CDT) Mondays through Thursdays! If you have any questions about investing in precious metals or would simply prefer to place your order by telephone, we are here to help

 

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Weekly Gold and Silver Market Recap for May 18, 2012

by Nicholas Wilsey. Email Nicholas.

Gold’s resiliency shines:

The week started in the same fashion as it ended last week. Gold prices were continually being affected by the strong U.S. dollar and the economic crisis in the Europe. The eurozone’s economic and political crises haves been affecting global markets during the past week. “Worries about Europe are pushing people to the dollar,” said Frank McGhee at Integrated Brokerage Services LLC. Even in the face of adversity many experts saw the long term picture;  “On a long-term basis, Gold has a place in most investment portfolios for two reasons: We foresee demand returning from emerging markets, and more and more investors buy Gold as a hedge against inflation,” said Sanjeev Sardana, financial adviser and chief executive officer of Bluepointe Capital Management. On Thursday the market responded with the first upswing of the week. “We have seen more interest come through from physical buyers … because prices have come down substantially,” said Afshin Nabavi at MKS Finance. The trend has continued to Friday, looking to end the week on a positive note. In a note to investors, UBS wrote, “Yesterday, Gold defied a stronger dollar, weaker equities, and another raft of negative EU headlines (to rise). It felt like the Gold market of yesteryears.” Continue reading