Weekly Gold and Silver Market Recap for June 6, 2012

by Nicholas Wilsey. Email Robert.

Gold being pulled in different directions:

In the week prior to this one the gold price was riding the high of news of a unified European Union. When Monday started the unification process was clearly going to be a bumpy road and the markets reflected that. However by mid-week talks of a record size stimulus program in Europe raised gold to a two week high. On Thursday and Friday the focus turned to the United States and the job reports. Even with an improvement, the numbers were still low enough to keep most pessimistic. “The Precious Metals bounced strongly when the (payroll) numbers turned out to be below expectations. But after all, the data is a bit mixed: It is not bad enough to suggest the Fed will go ahead with a new round of quantitative easing, but at the same time it is not good enough to exclude it,” said Gianclaudio Torlizzi, a consultant with T-commodity.

Europe continues in economic turmoil:

Over the past few months the news reports out of Europe have created a bleak picture of their financial status. The monthly unemployment numbers for the European Union is at a record high. The unemployment rate is the highest it’s been since the European Union was created in 1999. Compared to the United States unemployment rate of 8.2 percent, the European Union’s rate of 11.1 percent is alarming.  The European Central Bank (ECB) will announce more stimulus measures to buoy a floundering economy in the 17 nation euro currency union. Expectations are that any announcement of stimulus by the ECB would be followed by similar measures from other major central banks. The euro fell to a four week low against the dollar today, held down by a record low interest rate from the European Central Bank

U.S.A. Economy gets mixed reviews

Mixed signals are being sent regarding the future of the American economy. Lowered employment reports and a slowdown of manufacturing activity give reason to believe that America’s recovery has slowed to a stop. However, not all reports have been so negative. Construction spending has risen to its highest level since December 2009. Gary Schlossberg, chief economist at Wells Capital Management, said, “I think it’s interesting that the construction spending numbers do point to the fact that this recovery, such that it is, is being led increasingly by housing, which could provide some support to the economy later in the year.” On the other side is the job report that came out on Friday, where there is not the same optimistic outlook. Jeff Savage, regional chief investment officer for Wells Fargo Private Bank, said, “What a disappointing number. This was kind of disastrous. We’re not even keeping up with demographics at this point. This is not going to be liked in the markets.” Kathy Bostjancic, director of macroeconomics analysis for The Conference Board, is just as optimistic as Savage about America’s economy getting back on track. Bostjancic said, “There is little hope of acceleration in the pace of job growth anytime soon. These conditions are likely to persist at least through the summer and possibly longer.”

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