Gold Climbs Higher

 

Gold prices have made a significant move upwards today due to uncommonly positive news from Europe. Andrey Kryuchenkov, an analyst at VTB Capital summed it up by saying, “The (European Central Bank) comments that the (European Stability Mechanism) can eventually get a banking license and a pronounced euro rebound against the U.S. dollar drove gold prices to 2-1/2 week highs.”

The good news out of Europe today could be short lived. Reports from Spain and Greece are far from positive. In Spain the debt is getting to the point of needing a full bailout. In Greece, the problem is paying on the bailout they have already received. Greece’s Prime Minister Antonis Samaras was quoted as saying, “There are certainly delays in this year’s agreed program, and we must quickly catch up.” Another official speaking on condition of anonymity was much blunter, as the official said, “The debt-sustainability analysis will be pretty terrible.”

The issues in Europe have not gone unnoticed by the United States Treasury Secretary Tim Geithner. It has been seen that when a large global economic power such as Europe struggles, the effects are seen worldwide. “The economic recession in Europe is hurting economic growth around the world and the ongoing financial stress is causing a general tightening of financial conditions, exacerbating the global slowdown,” Geithner said in testimony before the House Financial Services Committee.

At 1:00 pm (EDT), the APMEX precious metals spot prices were:

  • Gold, $1606.90, Up $28.70.
  • Silver, $27.40, Up $0.50.
  • Platinum, $1400.50, Up $13.90.
  • Palladium, $565.50, Up $2.90.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CDT)! Or call us Fridays until 5 p.m. (CDT)! 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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Markets Fall as Europe Fears Swell

Gold retreated today as Europe continued to fan the flames of fear across the globe.  Markets were in selloff mode, as more than 2/3 of stocks on the New York Stock Exchange lost value and oil fell below $80 a barrel for the first time in eight months.  “Concerns over the prospects of Greece leaving the European Union and the resulting impact on the euro zone’s future economic health had sellers out in force,” said Alan Herbst, a principal at Utilis Advisory Group.

Despite gold’s drop in price recently, many analysts remain bullish on the long-term prospects.  “I remain constructive on gold as a store of value, or an alternative currency, but instead investors are using it as a source of cash or stepping over to go to the more traditional bastions of safety, as in the German bund, the U.S. dollar or Treasurys,”  said Mark Luschini, chief investment strategist at Janney Montgomery Scott. It seems that investors are using gold as an insurance policy, and filing claims to raise their cash positions.

Speculation abounds as to who will be tapped to fill the job of Treasury Secretary once Timothy Geithner steps down after the November elections.  The new secretary will undoubtedly have a full plate of issues to deal with, from a trillion-dollar deficit in the American budget to a debt crisis in Europe and our strategic relationship with China.

At 4 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1562.80, Down $15.30.
  • Silver, $27.86, Down $0.41.
  • Platinum, $1427.40, Down $33.00.
  • Palladium, $596.00, Down $21.60.
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Weekly Gold & Silver Market Recap for March 23, 2012

In the past few weeks, Gold has been experiencing a positive correlation to Treasury prices, which means Gold likely will follow the trend of U.S. bond prices. According to the Financial Times, an industry source reported in recent weeks that central banks have been buying Gold, with an estimated four metric tons of the metal being bought. The consumer demand seems to have helped boost Gold sales as well. According to Rohit Savant, an analyst with CPM Group in New York, “A lot of it has to do with bargain hunting.” Rohit said lower prices are enticing investors back to Gold.

With India‘s announcement late last week that taxes for Gold purchases will increase, many of that country’s jewelers have been on strike, which lead to a slump on gold demand this week. The jewelers’ fear that the shift to double customs duty on Gold will increase prices and weaken demand. This week, credit rating agency Moody’s announced that starting in April, India’s credit rating will be credit negative for its sovereign debt, based on its, “…dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates.”  Many investors are awaiting European data to see how the eurozone is faring after the Greek bailout deal. Yuichi Ikemizu, head of commodity trading, said, “A lot of people are on the sidelines at the moment. … We saw some bearish signs, but the market seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.” Continue reading