Mid-Day Gold & Silver Market Report – 9/26/2012

GOLD PRICES DIP; GERMANY FALLS IN LINE WITH REFORM MEASURES

Gold prices have gone lower today, but many believe it is a temporary action. "After rapidly rising between mid-August and mid-September, Gold has since been consolidating," BNP Paribas analyst Anne-Laure Tremblay said. "Short term, we could see a limited correction before the price resumes its ascent. The U.S. dollar has been strengthening of late, particularly against the euro. This is likely weighing on the Gold price. Beyond this, the Gold market is just taking a breather, as it is not far off the $1,800 an ounce level, which constitutes a strong resistance." The break in price in Gold has not gone unnoticed by investors. Gold-backed funds increased by almost 300,000 ounces yesterday according to reports.

There are 17 countries that are members of the European Union, and all but Germany were on board with the European Stability Mechanism (ESM). The ESM is being used to help control the economic crisis in the region. The German government had major concerns about the ESM and the country’s constitutional guidelines. Today there was a breakthrough and both sides came to an agreement. "The declaration corresponds to the guidelines set out by the Constitutional Court," Chancellor Angela Merkel's spokesman Steffen Seibert told a regular news briefing. This agreement is the first step in making the necessary reforms needed in the area.

The U.S. dollar has traded stronger today because of weak global currencies and a report on new house sales that showed some positives. Prices in August rose over 11 percent for new homes. That is a new record for a one month increase. However, sales of those homes have fallen over the same time frame, and that leaves more skepticism in the market. “The U.S. new home sales data was a bit weaker overall, especially in terms of months of supply,” said Richard Hastings, macro strategist at Global Hunter Securities.

At 1 pm (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1749.90, Down $15.50.
• Silver, $33.84, Down $0.12.
• Platinum, $1633.30, Up $0.50.
• Palladium, $626.90, Down $13.90.

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