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.