Gold prices are on the move

FRANKFURT AM MAIN, GERMANY - SEPTEMBER 27:  Th...

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Precious Metals continue to move upward as investors continue to view the recently released Federal Reserve policy meeting minutes in a positive light.  Hopes continue to grow that the Fed will take some action soon to boost the economy. “The default action has changed from do nothing to do something,” Mitsui Precious Metals analyst David Jollie said. “This means that we can expect to see some action soon, but the latest minutes imply the Jackson Hole and the September 12-13 meetings are not likely to see QE3 launched.”   The Platinum price is still feeling the effect of labor interruptions as clashes between the police and striking miners in South Africa have reached a death toll of 44 people.

Spain has begun negotiations with eurozone partners over the requirements necessary to lower its borrowing costs, but has stopped short of requesting an official bailout.  The strategy currently in favor includes a combined attack by the European rescue fund (EFSF) and the European Central Bank (ECB) purchasing Spanish debt in the primary and secondary markets.  Spain’s borrowing costs are at record levels since the launch of the euro 13 years ago.  “Negotiations have started and are well under way. Right now the preferred option, the one that is being actively discussed, is for the EFSF to buy bonds on the primary market and for the ECB to buy bonds on the secondary,” one of the sources told Reuters on condition of anonymity.

Concerns over Europe and its debt situation are dragging on US stocks, with the S&P 500 heading to a weekly decline. “People aren’t willing to invest,” said Stephen Hammers, the chief investment officer at Compass EMP Funds. “If Europe gets worse, U.S. investors will see that as a warning sign.”  Adding to the concern are comments from German Finance Minister Wolfgang Schaeuble stating that giving Greece more time would not solve its problems and cost investors.

At 1:00 p.m. (EDT), the APMEX

Precious Metals spot prices were:

  • Gold, $1,674.00, Up $35.00.
  • Silver, $30.72, Up $1.08.
  • Platinum, $1,557.70, Up $30.20.
  • Palladium, $657.50, Up $27.30.
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HSBC Predicts Gold to Rally above $1900 in 2012

 

In a report just released from HSBC Bank, “Economic uncertainty, geopolitical tensions and the uncertainty of the U.S. November elections are theoretically gold-bullish, and gold should perform better later in the year when U.S. growth is poor and the dollar is weak.” The report further stated that “We expect prices to rally to above $1,900/oz by the end of the year. Patience is the most important commodity.”

Gold is up slightly in early morning trading as the U.S. dollar index hit a one month low. The positive jobs report on Friday increased the appetite for risk and therefore put downward pressure on the U.S. dollar. There is much speculation that during the September Federal Open Market Committee further monetary easing will be announced. For now, gold remains in a fairly tight trading pattern while trying to decipher the direction of the global economies.

Spain is staying in the spotlight and the question is being asked of how much bailout they will actually need. At the moment, efforts are being made to stop the bleeding, but it is uncertain whether or not they will save the patient. The credit ratings make it very difficult for institutional investors to invest in Spain. There are concerns that this could turn into the same pattern as Greece, where smaller bailouts eventually turned into a full-fledged bailout.

At 9AM EDT the APMEX precious metals prices were:

  • Gold price – $1,1610.00  – up $2.70
  • Silver price – $27.80 – down 11 cents
  • Platinum price – $1,397.00 – down $17.40
  • Palladium price – $577.60 – down $1.60

 

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Gold Prices Slightly Lower in Overnight Trading

 

 

Gold and equity markets are both poised to advance in the event the European leaders announce a plan to bail out Spain and curb further contagion. Spain has requested further euro zone support in buying its sovereign debt. Germany continues to be resistant to this notion and this does set up a clash of wills as German finance officials prepare to meet with U.S. Treasury Secretary, Tim Geithner. Mr. Geithner has stated that the euro zone crisis is the biggest threat to the U.S. economy, so it is expected he will put pressure on Germany to take additional action.

 

The economic picture in Spain continues to worsen as their recession deepened in the 2nd quarter. Tough new austerity measures were enacted and this did take a toll on overall demand and consumer prices. Consumer prices rose 2.2% year over year. All in all, this paints a difficult picture for Spain to climb out of their budget deficit.

 

European stocks are currently trading higher on the hopes of the European Central Bank stepping in with additional measures, while U.S. stock futures are trading lower as they await potential action.

 

At 9 AM EST the APMEX precious metals prices were:

 

  • Gold price – $1,618.00 – down $2.20
  • Silver price – $27.78 – up 19 cents
  • Platinum price – $1,410.70 – up $2.50
  • Palladium price – $582.50 – up $9.60

 

 

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Euro tanks as Spain. Greece issues resurface

 

Renewed worries of a deepening eurozone debt crisis have sent the euro to a two-year low against the American dollar, and Precious Metals are following the former downwards.  Jeremy Stretch of CIBC said, “What began as a Spanish banking bailout looks to be moving rather quickly towards a possible sovereign bailout.  Overlay that with increasingly negative news on Greece and you get a fairly negative mix, so the path of least resistance for the euro is down.”  Spanish bond yields rose to the highest levels in the history of the euro.

The bad news out of Greece comes from reports that the International Monetary Fund (IMF) will no longer provide additional financing for the country.  Greece could be broke by September if it does not receive additional aid from the IMF.  The problem is Greece not being able to (or simply refusing to) meet goals set by the Troika in order to receive aid.  German Finance Minister Wolfgang Schaeuble said, “If there were delays, Greece must make up for them.”

“Dr. Doom” Nouriel Roubini believes that the U.S.A. economy is still on a downward slope.  After saying that rosy forecasts by economists are out of line, Roubini said, “In 2013 … as some tax cuts are allowed to expire, disposable income growth and consumption growth will slow.  The U.S. will then face not only the direct effects of a fiscal drag, but also its indirect effect on private spending.”

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

  • Gold, $1,569.30, Down $15.20.
  • Silver, $26.86, Down $0.53.
  • Platinum, $1,392.90, Down $21.60.
  • Palladium, $565.40, Down $11.70.

 

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Precious Metals prices are on the upswing this morning, following the euro

 

Precious Metals prices are on the upswing this morning, following the euro.  The common currency is rebounding on news that the European Union bailout fund will be able to support troubled Spain by buying Spanish bonds.  Mitsui Precious Metals analyst David Jollie said, “It seems that every time we do not have [a third round of quantitative easing] announced, gold slips back as some of these more speculative positions are liquidated.  After that disappointed selling, I think the market returns to more normal behavior and some of these speculators will try to rebuild positions.  Others such as the official sector are also likely buyers on price declines.”

Federal Reserve Chairman Ben Bernanke’s second day of testimony was as uneventful as expected in the way of QE3 announcements.  Strategists at Lloyds Bank said, “Barring some severe intervening event or drastic downside data prints over the coming 10 sessions, it would appear that the chances of additional monetary stimulus … being announced in the immediate future are receding.  Indeed, the timeline for Fed action is becoming increasingly tight, hemmed in as it potentially is by the looming presidential election in November.”

American stock futures are on the rise this morning, despite an increase in jobless claims.  Economists expected an increase in claims to 365,000, but the actual number came in much higher at 386,000.  These numbers have had less of an effect recently, as Daniel Silver of JPMorgan Chase & Co. explains.  He said, “We have to ignore claims for a few weeks because it’s just too hard to get a true signal from the numbers.  Even just a small mistake in the seasonal factors can generate big changes.”

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

  • Gold – $1,585.40 – Up $13.00.
  • Silver – $27.49 – Up $0.31.
  • Platinum – $1,417.90 – Up $13.70.
  • Palladium – $582.50 – Up $4.00.

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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Gold rallies strongly today

Gold, much like American stocks, rallied strongly today, though it wasn’t enough to claim a victory on the quarter.  The move upwards in Gold is thanks to expectations regarding Europe’s plan to curb its debt crisis being inflationary.  Historically, any type of monetary easing or money printing has been very supportive of Gold, as is any time of economic turmoil.  The news brought the euro up against the dollar, and Gold followed.

Part of the deal in Europe revolves around the European Financial Stability Facility being able to “provide support to banks directly, without going via national governments balance sheets,” according to Jens Larson of RBC in London.  Larson added, “That suggests that Spain’s public finances may eventually be freed of some of the burden associated with recapitalizing its financial system, and the statement also makes clear that a new deal for Ireland might be in the making.”  However, there is still concern that this won’t be a lasting solution, or at least that this news can continue to carry a market rally.

What the American dollar will do after the coming election has surprisingly nothing to do with the outcome of the election itself.  Historically, global and domestic economies have more of an impact on currency trade than political issues.  Currency trade has been a big factor in Precious Metals prices lately, with Gold and Silver moving inversely to the dollar.  While Europe’s financial crisis has caused the dollar to shine just by mere comparison, that isn’t likely to continue.  Axel Merk, portfolio manager of the Merk Hard Currency Fund said, “The dollar is benefitting from the mess in the eurozone, but things are not much better here.”

At 5:07 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold – $1,600.10 – Up $48.20.
  • Silver – $27.53 – Up $1.18.
  • Platinum – $1,448.50 – Up $60.70.
  • Palladium – $583.20 – Up $18.30.
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Euro region unusually divided before summit

Precious Metals are trading lower this morning, thanks to investors moving to the sidelines ahead of the European Union summit, which starts tomorrow.  Michael Turner of RBC Capital Markets said, “This could be a reasonably long holding pattern until the headlines start to flow from the European Council’s heads of state summit tomorrow.”  The wait-and-see approach has currencies like the U.S.A. dollar and the euro trading mostly flat.

While summer is likely to not hold any big moves by policymakers in the U.S.A., Europe, or China, Deutsche Bank analyst Daniel Brebner believes one thing could support gold.  “…I think we’ll continue to see very steady buying by central banks, which have been in the market for the last couple of quarters or so.  That should help gold prices from weakening…” he said.

European leaders aren’t exactly agreeable ahead of the summit.  German Chancellor Angela Merkel, in response to euro bonds being a potential solution to the debt crisis, said that she doesn’t expect that to happen in her lifetime.  With borrowing costs in Italy and Spain reaching dangerous levels, the leaders of those countries are calling for assistance, and Merkel wasn’t keen on that idea either.  Spanish Prime Minister Mariano Rajoy said, “The most urgent issue is the one of financing.  We can’t keep funding ourselves for a long time at the prices we’re currently funding ourselves.”

At 9 a.m. (EDT), the APMEX precious metals spot prices were:

  • Gold – $1,567.30 – Down $9.10.
  • Silver – $26.80 – Down $0.36.
  • Platinum – $1,409.70 – Down $19.20.
  • Palladium – $580.10 – Down $14.60.
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