Morning Gold & Silver Market Report, 7/31/2012

FED POLICY MEETING SET TODAY; GOLD HOLDING FIRM  

Precious Metals prices remained even in overnight trading, ahead of the start of a two day United States Federal Reserve policy meeting. The main area of focus remains the eurozone and possible quantitative easing domestically. There is a growing feeling among investors that there will be action taken on both fronts. Regarding quantitative easing, HSBC wrote in a note to investors, “Some of the tools the Fed could use (to stimulate growth) include extending the use of quantitative easing, extending (its bond buying program) 'Operation Twist,' or employing new tools such as cutting interest on reserves, or extending interest rate guidance. Traditionally, Gold prices closely follow U.S. monetary policy indications.” UBS also increased its Gold price projections in the near term, saying the metal’s price would reach $1,700 to $1,750 per oz within the next three months.

U.S. stock futures were on the rise ahead of today’s Fed meeting, which will extend the S&P 500’s monthly gains. The expectation remains that any action taken by the Fed is most likely going to be in September. The most likely scenario would be the purchase of housing and government debt. Strategist Henrik Drusebjerg said, “Recent policy maker comments suggest more quantitative easing is in the making. This time, (Fed Chairman Ben) Bernanke will wait for the European Central Bank, as the Fed for once plays second fiddle.”

Meanwhile conditions in Syria remain quite dire. However, a plan has started to form over President Bashar al-Assad’s removal from power. United States Defense Secretary Leon Panetta has said, “I think it’s important when Assad leaves -- and he will leave -- to try to preserve stability in that country. The best way to preserve that kind of stability is to maintain as much of the military and police as you can, along with security forces, and hope that they will transition to a democratic form of government. That’s the key.” He was also quick to point out that it is “very important that we don’t make the same mistakes we made in Iraq.”

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

• Gold, $1,626.50, Up $5.00.
• Silver, $28.32, Up $0.19.
• Platinum, $1,430.00, Up $18.20.
• Palladium, $593.00, Up $3.70.

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