Precious metals price jump following eurozone announcement

Precious Metals prices were on the rise following losses Thursday. Precious Metals prices have been following the global economic situation and the movement of the American dollar. There is speculation that Silver is undervalued at current levels and about what actually is driving the price. Julian Phillips at silverforecaster.com said, “With the monetary stresses now and for the next few years at current levels, there is little reason why prices should fall. Gold will react more and more as a monetary metal, and the Silver prices will move with it, not with economic conditions.”

Crude oil and Gold prices began to climb this morning after European Union leaders announced a strategy to have a single financial director for the region. The European Central Bank will step into this supervisory role for banks in the eurozone. This approach should help calm the markets. In some bearish news affecting crude oil, Saudi Arabia is planning to resume an oil pipeline project that has been on hold for a reported two decades, which should relieve some concerns involving the Strait of Hormuz.

United States consumer sentiment for June fell to its lowest level since December. Americans’ attitude toward the economy isn’t necessarily optimistic now, especially from the viewpoint of those in households with incomes of more than $75,000. Richard Curtin, a survey director, said, “Since these households account for a large share of total spending, if the declines continue in the months ahead, it could have a substantial impact on total spending.”

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

  • Gold, $1,599.10, Up $47.50.
  • Silver, $27.57, Up $1.22.
  • Platinum, $1,441.30, Up $53.50.
  • Palladium, $586.50, Up $21.60.
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Political turmoil in Greece suggests possible Euro exit

Gold has officially erased any gains it has earned in 2012 based on the current financial situation in Europe.  The eurozone debt crisis has been affecting the global market over the past week with Europe’s political uproar and an unknown economic outlook.  “Worries about Europe are pushing people to the dollar,” Frank McGhee, at Integrated Brokerage Services LLC.

The Greek election has frightened many that the nation may exit the eurozone, which in turn would create a catastrophe for the financial market.  “I think for as long as the crisis in Europe drags on, it’s going to keep sentiment broadly in check. At the moment, gold has been painted with the risk brush. It’s going to be very much a tracker of the equity markets,” said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.  Economists at Citi have predicted the chances of Greece leaving the euro to be between 50 and 75 percent.   Billionaire investor, George Soros said,” The euro is seriously at risk. The consequences of a non-controlled implosion risks to be disastrous.”

Oil prices have continued to drop to its lowest level in almost five months due to Europe’s fiscal crisis along with Saudi Arabia’s oil minister who made it clear that prices could decline even more.  “Greece is unable to form a coalition government and Europe is the biggest problem right now,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. “When the Saudis speak, the market tends to listen. They’ve been trying to talk down the market for a while.”

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

  • Gold – $1557.80 – Down $27.70.
  • Silver – $28.19 – Down $0.78.
  • Platinum – $1439.10 – Down $33.30.
  • Palladium – $591.00 – Down $13.30.
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Weekly Gold & Silver Market Recap for April 06, 2012

by John Foster. Email John.

Modern-day meeting of the Federal Open Market ...

Modern-day meeting of the Federal Open Market Committee at the Eccles Building, Washington, D.C. (Photo credit: Wikipedia)

FED MINUTES MOVE THE MARKETS:

The major news of the week was the release of minutes from the Federal Open Market Committee meeting.  There was little discussion of any plans for future quantitative easing by the Federal Reserve.  Stocks and commodities — including precious metals — experienced a significant selloff, with prices for Gold and Silver dropping to levels not seen since mid-January, making both metals particularly attractive from a physical demand perspective. However, some analysts are saying that the Fed’s current policy can still support Gold prices, even without more easing. In a recent report, James Steel of banking giant HSBC said, “Policy is already ultra-accommodative by conventional monetary standards, and therefore Gold-friendly. This may be overlooked or underestimated in the current sell-off, we believe.”

 SPAIN THE NEW GREECE?

The euro is feeling the effect of Spain’s debt crisis, which is not being fully contained at the same time borrowing costs are on the rise. “We haven’t seen any major improvements in the European debt situation,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “After Greece, investors may be beginning to shift their focus onto countries like Spain, Portugal and Italy. I expect the euro will gradually sink as the region’s economy deteriorates.” In Spain, last week’s budget announcements coupled with the release of less-than-stellar debt-to-GDP ratio have a number of investors concerned, as the levels are well in excess of previous estimates. This is the highest debt level in 22 years. Last year, the debt-to-GDP ratio was 68.5 percent, while this year it has climbed to 79.8 percent. Although this ratio is less than the European Union average, it is still quite high and climbing. Continue reading