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Morning Gold & Silver Market Report – 3/1/2012

IRAN SANCTIONS ALREADY EFFECTIVE; QE3 SQUELCHED?  

Precious metals prices have rebounded slightly today from Wednesday’s volatility. The Gold market was largely influenced by the perception presented in previous remarks by Federal Reserve Chairman Ben Bernanke, but were almost roundly squelched in prepared statements before a House of Representatives panel yesterday. Today, Bernanke is scheduled to sit in front of Senate members. Echoing that perception, Standard Bank’s Walter de Wet said, “We had a sense that the Gold market was increasingly pricing in QE3, and obviously Bernanke has put a dampener on that.” But the drop in prices strongly pushed physical sales of the metal, with one dealer saying, “It's been a long time since we (saw) such decent buying.”

Cautious optimism surrounded Bernanke’s comments to the House committee Wednesday. He said that although there are “positive developments” in the job market, it is still “far from normal.” He also mentioned that any effect of higher gasoline prices would most likely be temporary. He also said, “Monetary policy is not a panacea. … It can help offset cyclical fluctuations and financial crises like we’ve had, but the long-term health of the economy depends mostly on decisions taken by the Congress and the administration.” Observers now await Bernanke’s message today to the Senate. Economist Eric Green said, “The nice thing about this is he always has a chance to refine his message on the second day.”

The global economy stands on a precipice of uncertainty surrounding oil. A U.S. advisory body has found that trade sanctions against Iran already are having an effect before they have officially started. Already there is talk of supply shortages, which will only drive prices higher. The biggest customers of Iranian oil -- China, Japan and India -- are entangled with the U.S.-led sanctions. Another key issue is that OPEC’s supply is fulfilled by Iran. Iran is the second-largest OPEC producer behind Saudi Arabia, so any additional supply is going to be limited. Former State Department adviser Trevor House affirmed that sentiment when he said, “With oil inventories and spare OPEC production capacity running low, consumers don't have much buffer against additional disruptions in supply. … That means the needle the administration has to thread to pressure Iran without raising oil prices has gotten even smaller.”

At 8 a.m. (CST), the APMEX precious metals spot prices were:

  • Gold - $1,705.70 – Up $8.60.
  • Silver - $34.68 – Even
  • Platinum - $1,685.50 – Up $4.40.
  • Palladium - $703.00 – Down $0.90.

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Disclaimer:
APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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