Housing and Consumer Confidence Reports Due


Stocks are holding their own Tuesday morning as investors are waiting for housing and consumer confidence data. At 10 a.m. (EDT), the July home-price index and the September consumer-confidence index will be released. Christian Tegllund Blaagjerg, Chief economist at FIH Erhvervsbank, said, “I think we’re going to see a very bullish housing market. I think the bottom was reached awhile ago. We’re not on a Ferrari-like recovery path, but still more like a Chevy pickup truck, [with] stable and continuing improvement.”

Gold is gaining ground against a stronger dollar today. The move was in response to data that central banks added to their Gold holdings in July and August. The countries leading the charge were South Korea with an increase of 16 tonnes and Paraguay with an addition of just over 7.5 tonnes. Gold is on a four-month positive trend, up 4.6 percent in September alone. Daniel Smith, an analyst at Standard Chartered said, “Ultimately, I think it’s quite likely we will get above $1,800 before the year-end, so maybe a month of sideways trading possibly and then generally trending higher in the next six months to a year.”

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

  • Gold, $1,773.60, Up$10.00.
  • Silver, $34.39, Up $0.40.
  • Platinum, $1,635.50, Up $12.50.
  • Palladium, $641.30, Down $4.20.

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Gold slightly higher

American stock futures are mostly flat this morning, with many investors seemingly unsure how to react to recent developments in Europe and the U.S.A.  David Morrison of GFT Markets said, “As we have seen many times recently, the previous day’s price action has been reversed in early trading.  Yesterday we saw stocks rally” as a result of J.P. Morgan’s CEO testifying before the Senate Banking Committee.  However, stocks “then tumbled after an auction of U.S.A. 10-year Treasuries,” added Morrison.  While investors believe stocks may not be the safest place for their money, Morrison explained, “An increasing number are coming to the opinion that this continued flight into U.S.A. Treasuries despite pathetic yields is a very bad sign indeed.”  Gold could benefit from this realization, as the metal has historically been a safe haven investment in times of uncertainty.

At a recent bond auction, the yield on 10-year bonds in Spain rose above 7 percent, which was the trigger point for Greece, Ireland, and Portugal when those countries requested aid from the European Central Bank.  Moody’s Investor Service cut Spain’s credit rating by three notches, and now rests one level above junk status.  The pressure is on German Chancellor Angela Merkel to come up with a solution, but she recently shot down what she termed “miracle solutions,” calling them counterproductive and said that they would violate the German constitution.

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

  • Gold – $1,627.50 – Up $8.10.
  • Silver – $29.01 – Down $0.03.
  • Platinum – $1,486.80 – Up $18.00.
  • Palladium – $625.00 – Up $1.80.
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Gold prices holding steady

With all the negative global economic news being reported, Gold is holding steady. While the news from Europe and its global effects seem to dominate the headlines, Gold is quietly holding its place. The larger question is not the situation in Europe, but how that might affect the United States economy. “(Federal Reserve Chairman Ben) Bernanke, in comments made to the Congress committee last week, seemed to be intimating that QE was off the table, but I wonder if, (as) Europe continues to drag, the likelihood of QE continues to grow. That in itself should be supportive for Gold,” Citigroup analyst David Wilson said.

Talk in Europe has focused on Greece and the major economic turmoil unfolding. There has been talk of an exit from the European Union by the Greeks. However, Vitor Constancio, vice president of the European Central Banks, says such a move would have a dire outcome. “I cannot imagine a country to leave the euro and survive. For that country (Greece) in particular, it would be catastrophic.”

Reports released today showed retail sales fell for the second straight month in the United States. Taking that information and adding it to other recent reports such as employment and manufacturing data, they all show that American recovery efforts are slowing. As it slows, the talk of more monetary easing picks up. “We still believe the Fed would prefer to wait a bit longer on QE3 to see how the domestic and global situations play out, but the weak data certainly strengthen the argument for action,” said Michelle Girard, senior economist at RBS in Stamford, Conn.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,616.40, Up $2.60.
  • Silver, $28.99, Down $0.06.
  • Platinum, $1,468.10, Up $11.70.
  • Palladium, $623.50, Down $0.80.
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Gold gains momentum & Spanish Yields

Gold continues to march in positive territory during today’s mid-day trading and appears to be gathering momentum. The euro gained ground relative to the dollar and other commodities (copper) are seeing their prices moving up as well. “(We had) a small pop higher in the euro and that was it,” Saxo Bank vice president Ole Hansen said. “The market wants to go higher now and it has taken comfort from the fact that buyers returned fairly quickly after the sell-off last week.”

The U.S.A. stock market is holding on to some gains today while absorbing the impact of Spanish bond yields hitting historic highs. There is still concern over Spanish debt levels and questions about the bank rescue deal. “Into their close, both Spanish and Italian bonds are bouncing off their (price) lows. The daily egg shells we walk on this week over Spain will of course be followed by Sunday’s election in Greece and what, if anything, the FOMC (Federal Open Market Committee) will announce next week,” said Peter Boockvar, at Miller Tabak & Co. The coming election in Greece is being viewed as a major factor in its status in the Eurozone.

At 1:00 p.m. (EDT) – the APMEX precious metals spot prices were:

  • Gold – $1,612.90 – Up $16.10.
  • Silver – $28.96 – Up $0.26.
  • Platinum – $1,454.50 – Up $3.20.
  • Palladium – $623.20 –Down $2.00.
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Bullish investors waiting for Gold trigger

Gold has moved off its morning gains today, as another sharp drop in the euro’s value has investors looking to the United States dollar.  Issues with the Spanish banking system, a spike in Italian borrowing expense, and the upcoming Greek elections have fanned the flight to the safety of the dollar. But American economic data is starting to disappoint, with increases in new jobless claims and a sharp drop in the Midwest business activity index, which could open the door to a new round of easing. “If we had momentum upwards, there are still plenty of people who are bullish and who would buy into that. But at the moment, you have pressure from a strong dollar, or perhaps more accurately a weak euro, and people are just a little bit wary. That doesn’t alter the fact that there are plenty of bulls out there. They are waiting for a trigger to send the price higher. And the question is, what’s that trigger?” said David Jollie at Mitsui Precious Metals.

Today’s drop in U.S.A. stocks has the Dow Jones industrial average on pace to finish May with a loss, which would be its first loss in the past eight months. Worries over the European Union and its economies added to troubling employment numbers. “It’s the summer months, unfortunately, so that’s one strike. And everyone is out hunting for black swans and finding them. It’s a strange environment where investors just don’t trust the market at all, so the question is how cheap do stocks have to get before they can entice investors again,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,569.10, Up $3.90.
  • Silver, $28.10, Up $0.03.
  • Platinum, $1,420.80, Up $17.60.
  • Palladium, $613.00, Up $7.30.
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