Central banks jump back on the Gold train

Prices of Precious Metals were boosted this morning by news of purchases from the biggest of spenders. Central banks in Turkey, Ukraine, Mexico, and Kazakhstan increased their Gold holdings in April, according to the International Monetary Fund. Commerzbank AG said, “We regard the central banks as a stabilizing element on the Gold market and anticipate increasing buying of Gold.” Lachlan Shaw of Commonwealth Bank of Australia said that early signs of an American recovery, a slowdown in Chinese growth, question marks over United States monetary policy and a sovereign debt crisis brewing in Europe are all keeping the market in a wait and see mode. “Any of these four catalysts can drive prices and investment demand,” he said.

The weekly jobless claims report boosted the American dollar’s appeal. The report showed no movement in the number of claims, remaining at last week’s level of 370,000. American stock futures added to gains after the news.

Weakness in China’s economy and continued struggles in the eurozone appear to be forcing the Chinese government’s hand, as economists and strategists are predicting aggressive stimulus in that country. Dariusz Kowalczyk of Credit Agricole said, “The focus of the stimulus is likely to be on the fiscal side … because this is the fastest way to boost aggregate demand.” Economic stimulus around the world has been positive for Gold and Silver prices in the past.

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

  • Gold, $1,577.20, Up $27.20.
  • Silver, $28.54, Up $0.94.
  • Platinum, $1,434.30, Up $18.20.
  • Palladium, $601.70, Up $8.60.
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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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