Mid-Day Gold & Silver Market Report, 9/4/2012

GOLD PRICE KEEPS RISING; EUROPE IN SPOTLIGHT  

Prices for Gold and other Precious Metals had big gains last week due to the United States Federal Reserve meeting and the probability of another round of monetary easing. This week started off with the same rise in prices, and monetary easing continues to be the reason. However, the locale has shifted to Europe, with meetings of the European Central Bank (ECB). “The ECB is evidently planning to launch a new government bond intervention program, which would inject further liquidity into the market. This should also benefit commodities due to the lack of attractive alternative investments,” analysts at Commerzbank said in a note. Some speculate these actions by the ECB could be implemented as soon as this week.

A few weeks ago, ECB President Mario Draghi said the bank would do “whatever it takes” to keep the euro as the major currency of the region. This week will be a good indication of what Draghi and his associates have in mind to do. “Draghi certainly has to present something,” said Guillaume Menuet, economist at Citi. “A document of some sort, something of substance, is what markets want to see in order to justify valuations.” One of the main issues is not a plan of action, but rather a plan that all the countries involved can agree to.

In the United States, there were more negative economic reports released today. The August manufacturing report showed the largest drop in more than three years. The nation’s factory activity was rated at 49.6, which indicates an unforeseen contraction in the sector. United States construction also fell off by 0.9 percent; as with the manufacturing report, experts had predicted an increase, as well. Both of these reports give more credence to talk of monetary easing by the Federal Reserve.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,694.40, Up $8.30.
• Silver, $32.27, Up $0.83.
• Platinum, $1,566.50, Up $28.20.
• Palladium, $641.00, Up $11.60.

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