Closing Gold & Silver Market Report, 7/5/2012

RECORD EUROPEAN STIMULUS PUSHES DOLLAR UP AS EURO, GOLD DROP    

The euro fell to a four week low against the dollar today, held down by a record low interest rate from the European Central Bank and a rise in the value of the dollar brought on by a report that showed more American jobs were created in June than previously thought. While the unemployment rate usually has little to no correlation to the value of the dollar, this particular announcement eased expectations that the Federal Reserve will embark on further stimulus measures, which in turn lowered inflation fears and led to a rise in the dollar. Almost the opposite was true in Europe, where stimulus measures are fanning the flames of inflationary fears.

Retail sales and service sector growth data both came in lower than expected by analysts, adding to the pessimism about the direction of the American economy. Erik Johnson, U.S. economist at IHS Global Insight, cited the stronger dollar as one cause of the slowdown, pointing to lower exports as the driver of slower growth. “While the eurozone recession intensifies, export orders should continue to suffer, especially as stronger demand for the dollar leaves U.S. businesses less competitive in external markets,” Johnson said. Market Watch quoted a wholesale trade purchasing manager as saying, “Business is still growing, but there has been a definite slowing in growth.”

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,606.20, Down $17.10.
• Silver, $27.72, Down $0.64.
• Platinum, $1,475.80, Down $14.10.
• Palladium, $586.50, Down $13.40.

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