Mid-Day Gold & Silver Market Report – 3/12/2012
FED TO MEET TUESDAY; PORTUGAL NEXT IN DEBT-RELIEF LINE?
Precious metals prices have remained relatively steady through morning trading, thanks to a fairly slow news day. But there remains an undercurrent of uncertainty affecting markets. The planned Federal Reserve meeting Tuesday is expected to be low key, and the Greek debt deal is proceeding in an orderly fashion. Low interest rates are viewed as a boost for Gold. Analyst Walter de Wet said, “We have not necessarily turned too bearish in Gold yet, because structurally there is still a case to be made for a higher Gold price.” Consumer demand is also seen as a key driver.
Portugal, whose government debt is junk-rated at Moody’s, Standard & Poor’s and Fitch, appears likely to be the next nation needing to restructure its debt, said Matteo Regesta of BNP Paribas SA in London. “The market doesn’t believe that Greece is a unique case. … Portugal is very similar. It would be easy to try to placate and distract the attention of the bond vigilantes, if only policy-makers would immediately close the funding gap, pre-empting any further pressure on the periphery. I’m afraid I don’t think that’s going to happen,” Regesta said. Portugal is raising taxes and customer spending in an effort to meet the terms of the aid plan previously agreed to with the European Union. While some countries are dropping their debt (including Spain and Italy by 80 and 150 basis points, respectively), the peripheral countries are starting to feel the burden.
The Fed meeting tomorrow is not expected to have any major effect other than a review of policy behind closed doors. The expectation is for groundwork to be laid for an exit strategy with the Fed’s monetary easing policy. Though nothing is expected, chief economist Steven Ricchiuto said, “The minute the market moves away from them, the Fed wants to make sure the market thinks it (more easing) is still possible. … The Fed will continue to suggest that more accommodation will be forthcoming if needed without actually promising anything definite at this point.”
At 12:03 p.m. (CDT), the APMEX precious metals spot prices were:
- Gold - $1,700.50 – Down $12.00.
- Silver - $33.62 – Down $0.61.
- Platinum - $1,696.30 – Up $10.40.
- Palladium - $704.20 – Down $5.80.