Overnight profit taking for the euro


International Monetary Fund's Managing Directo...

International Monetary Fund’s Managing Director Dominique Strauss-Kahn (L) talks with , European Central Bank President Jean-Claude Trichet (C) and Italy’s Governor Mario Draghi (R) prior to the start of their G-7 meeting at the Istanbul Congress Center (Photo credit: Wikipedia)


After a four month euro rally, Tuesday saw some profit-taking and the euro fell against the dollar. Spain’s seeming reluctance to seek a bailout isn’t sitting well with investors either. Derek Halpenny, head of FX research in London, said “If Spain steps forward (to ask for a bailout) and all of us get some clarity it would remove an element of uncertainty.” While in a television interview, Spain’s Deputy Prime Minister admitted they were still considering the conditions of a possible bailout.


The other side of the euro coin is that German investor confidence rose for the first time in five months. The rise is in response to the European Central Bank’s plan to buy government bonds. Holger Schmieding, chief economist at Berenberg Bank in London, said of ECB President Mario Draghi, “Draghi may have saved Germany.


Gold, which tracks closely to the euro, came off a recent six month high. Similar to the euro, it succumbed to overnight profit-taking. Without any new news today, it wouldn’t be surprising to see investors jump back in.


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


  • Gold, $1,764.60, Down $5.00.
  • Silver, $34.44, Up $0.06.
  • Platinum, $1,670.10, Down $3.50.
  • Palladium, $682.40, Down $6.70.


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Gold gives up strong start

At the opening of today’s market the outlook for gold was looking up. The Euro showed signs of improvement, gaining ground on the U.S.A. dollar. The improvement was short lived. The value of the Euro hit its lowest mark in almost two years after Spain’s credit rating was downgraded. “That trade which is directly tied to the euro weakness, and has made gold so significantly volatile, is going to have a short-term negative impact on gold, people are trading out of gold based on the euro weakness, but they will buy back into gold,” according to Jeffrey Sica, chief investment officer of SICA Wealth Management LLC.

The financial situation in Greece has been well documented. The rest of the European Union has been making contingency plans if Greece is no more. Upon first look the plans seems solid, however once the details emerge there are unresolved issues. If Greece is removed the effects will be felt thought Europe and could put other countries in financial jeopardy. Berenberg Bank economist Holger Schmieding said, “Policymakers need to make sure that the potential Greek precedent of a forced conversion of domestic euro deposits into a weak new currency would not spark a run on banks … elsewhere.”

For the U.S.A. the economic outlook seems better than it has in quite a while. Jobs are growing, the housing market is up, and the U.S.A. dollar value is going up. With all these positive news consumers still aren’t buying it. In a May survey consumer confidence is at a five month low. Only 13.6% of consumers say the business conditions are good. These reports can be a major driver in business; more than two thirds of the countries spending are based off of consumer confidence.

At 5:00 p.m. (EDT), the APMEX precious metals spot prices were:

  • Gold – $1556.30 – Down $14.40
  • Silver – $27.92- Down $0.56
  • Platinum – $1433.20 Up $4.70
  • Palladium – $606.50 Up $14.70
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