Gold Pushing Towards $1700 – Silvers Above $32

 

European Central Bank

European Central Bank (Photo credit: Travel Aficionado)

 

Comex gold futures are slightly higher this morning setting new five month highs. Gold and silver prices shot upwards after Fed Chairman Ben Bernanke seemed to open the door to QE3 in his speech last week from Jackson Hole. Now, markets are focused on the monthly meeting of the European Central Bank, which takes place on Thursday. Many analysts expect the ECB will announce a monetary stimulus plan that will boost both stocks and precious metals.

 

Adding more pressure to the ECB, Moody’s Investors Service changes its euro zone outlook to negative. Moody’s warns that if they cut the ratings of the European Union’s four biggest budget backers: Germany, France, the U.K. and Netherlands, they might just downgrade the entire bloc.

 

The U.S. and Europe may not be the only economies on the verge of receiving a stimulus. Although the Chinese government has yet to implement any stimulus measures in the face of a slowing Chinese economy, there is additional evidence that their economy is slowing. On Saturday, the official manufacturing-sector survey came out 49.2 in August. This falls below the level of 50 that separates expansion from contraction. In another survey more focused on small to mid-size business, published by HSBC, the number was 47.6.

 

At 9AM EDT the APMEX precious metal prices were:

 

  • Gold price – $1,691.70 – up $5.60
  • Silver price – $32.20 – up 76 cents
  • Platinum price – $1,558.10 – up $19.80
  • Palladium price – $640.80 – up $11.40

 

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Gold slightly higher

American stock futures are mostly flat this morning, with many investors seemingly unsure how to react to recent developments in Europe and the U.S.A.  David Morrison of GFT Markets said, “As we have seen many times recently, the previous day’s price action has been reversed in early trading.  Yesterday we saw stocks rally” as a result of J.P. Morgan’s CEO testifying before the Senate Banking Committee.  However, stocks “then tumbled after an auction of U.S.A. 10-year Treasuries,” added Morrison.  While investors believe stocks may not be the safest place for their money, Morrison explained, “An increasing number are coming to the opinion that this continued flight into U.S.A. Treasuries despite pathetic yields is a very bad sign indeed.”  Gold could benefit from this realization, as the metal has historically been a safe haven investment in times of uncertainty.

At a recent bond auction, the yield on 10-year bonds in Spain rose above 7 percent, which was the trigger point for Greece, Ireland, and Portugal when those countries requested aid from the European Central Bank.  Moody’s Investor Service cut Spain’s credit rating by three notches, and now rests one level above junk status.  The pressure is on German Chancellor Angela Merkel to come up with a solution, but she recently shot down what she termed “miracle solutions,” calling them counterproductive and said that they would violate the German constitution.

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

  • Gold – $1,627.50 – Up $8.10.
  • Silver – $29.01 – Down $0.03.
  • Platinum – $1,486.80 – Up $18.00.
  • Palladium – $625.00 – Up $1.80.
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