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Mid-Day Gold & Silver Market Report 3/19/2012

CENTRAL BANKS BUYING GOLD WHILE PRICES ARE LOW  

Precious metals prices have moved little through this morning. In the past few weeks, Gold has been experiencing a positive correlation to Treasury prices, which means Gold likely will follow the trend of U.S. bond prices. According to the Financial Times, an industry source reported in recent weeks that central banks have been buying Gold, with an estimated 4 metric tons of metal being bought. The attractive prices are considered to be why central banks were drawn to purchasing. The consumer demand seems to have helped boost Gold sales at this time, more accurately termed “bargain hunting” at these price points.

With India's announcement Friday that taxes for Gold purchases will increase, many jewelers across India have been on strike, knowing the shift to double customs duty on Gold will increase prices and weaken demand. Anjani Sinha, chief executive of the National Spot Exchange in Mumbai, outlined a method to entice citizens to increase investment in Gold. “The scheme should be so attractive that it would lure Indian households to deposit their Gold ornaments with banks or Reserve Bank-approved mints in exchange for a Gold bond. This Gold can be melted, refined, converted into hallmarked Gold bars and resold by the banks in the domestic market. This would help reduce the import of Gold in India without impacting the domestic demand and supply dynamics.” Today, credit rating agency Moody’s announced that starting in April, India's credit rating will be credit negative for its sovereign debt. Moody’s said, “A dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates weakens the government's credit profile. And the … budget’s lack of specific policies to address these weaknesses is credit negative.”

Oil prices are moving up today as unrest continues in the Middle East. Iran’s nuclear program is still a source of concern, and the potential of military strikes and Western sanctions are sending prices soaring. With higher oil prices threatening to stall economic growth globally, OPEC leader Saudi Arabia is increasing production, and the U.S. government is considering tapping oil reserves. Libya also appears to be ramping up its oil production. “Iran as a supply risk is supporting prices, and weaker demand, rising production and physical oversupply is weighing on prices, so it is keeping prices rather stable in this narrow range,” said Carsten Fritsch, commodity analyst at Commerzbank.

At noon (CDT), the APMEX precious metals spot prices were:

  • Gold - $1,666.20 – Up $8.90.
  • Silver - $33.00 – Up $0.36
  • Platinum - $1,684.00 – Up $7.50.
  • Palladium - $707.50 – Up $5.80.

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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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