Housing and eurozone boost Gold’s safe haven appeal

Precious metals prices have been on quite the journey today, but as the eurozone issues continued to simmer and the disappointing domestic housing data was released, the early morning losses were replaced with gains throughout the

stock market

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mid-day and afternoon. Portfolio manager James Dailey said, “This morning’s reversal is indicative that people are starting to come to grips with the fact that there isn’t any fast and easy solution in Europe. And if things start to really get out of hand in Spain and Italy, that means gold can catch a bid.” Platinum price was also down with other industrial metals due to economic concerns.

The news out of the eurozone still involves Greece, but has really picked up with concerns building for Spain. Spanish banks continue reeling over the burst property bubble and flailing stock markets surrounding the banking sector. EU Economic and Monetary Affairs Commisioner Olli Rehn has offered a couple of options for the Spanish government to consider, including another year to work out a solvent budget or direct financial aid to distressed banks. In a move of concern the U.S. Treasury sent top official Lael Brainard to speak with Greece, Germany, Spain and France.

Domestic stock markets fell on disappointing housing data, Greece’s future in the euro currency and the solvency of Spanish banks. Overseer Hayes Miller said, “It’s a high-anxiety market… We’re not anywhere near the end of Europe’s debt crisis. In the U.S., economists are making the point that if housing were to stabilize, consumption could grow. The question is: what’s going to allow the housing market to stabilize?”

At 5:05 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,563.60 – Up $13.10.
  • Silver – $27.97 – Up $0.09.
  • Platinum – $1,402.60 – Down $27.50.
  • Palladium – $608.00 – Up $2.00.
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Gold & Silver Prices Slightly Off in Morning Trades

Markets continue to monitor news coming out of the euro zone. Greece wants a new deal with less austerity, but there are no signs Germany is willing to give in. Of course, Greece is not the only problem. Investors will watch Spanish banks for any signs of additional weakness. There are those who are concerned there could be runs on the banks.

Euro zone leaders will meet informally in Brussels this week and French President Francois Hollande is expected to propose the idea of a Eurobond. A Eurobond would be jointly underwritten by all euro zone members. Germany is reluctant to support such a measure until other member states have their financial houses more in order. If these bonds were to written, it would place Germany in a position of financing the debt of other states.

The leaders of the G-8 met over the weekend at Camp David. They all agree that Greece should stay in the euro zone and they all agree “on the importance of a strong and cohesive euro zone for global stability and recovery.”

The continued uncertainty in Greece has caused the euro to give up the small gains it had achieved against the dollar. This largely accounts for the weak openings for gold and silver.

At 9AM EST the APMEX precious metal prices were:

  • Gold price – $1,589.20 – down $4.20
  • Silver price – $28.31 – down 48 cents
  • Platinum price – $1,461.80 – up 50 cents
  • Palladium price – $613.30 – $7.70
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Gold Ends Higher for the First Day in Five

After closing lower for four consecutive trading days, gold prices rebounded today after hitting a 10-month low.

Oil prices continued to decline today, providing some welcome relief to American consumers. “We had soft economic data and European concerns weighing on equities and oil is being pulled along lower,” said Jason Schenker, president of Prestige Economics LLC. “Elevated concerns about the European story and disappointing U.S. economic data have been the story for two weeks now.”

Moody’s is set to announce downgrades of several Spanish banks this evening. According to a source with knowledge of the issue, the key reasons for the downgrades are rising loan defaults, a renewed recession, restricted funding access and the reduced ability of the government to support lenders. The Spanish newspaper El Mundo reported yesterday that customers of the Spanish bank Bankia SA had withdrawn more than 1 billion euros from the bank since the government announced it was taking over the bank on May 9. Bankia SA and the Spanish government denied that a bank run was underway, but markets hammered Bankia’s share price nonetheless.

Ahead of tomorrow’s G8 summit at Camp David, Barack Obama is urging European powers to ease austerity policies and adopt a growth strategy. The newly elected president of France, François Hollande, is expected to support Obama’s argument. Hollande defeated incumbent Nicolas Sarkozy by campaigning against austerity measures, which are deeply unpopular in some European countries.

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

  • Gold – $1,575.20 – Up $37.10.
  • Silver – $28.08 – Up $0.80.
  • Platinum – $1,454.00 – Up $19.80.
  • Palladium – $604.00 – $7.90.
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