Closing Gold & Silver Market Report – 12/12/12

GOLD, STOCKS CHANGE LITTLE FOLLOWING QE NEWS

The Gold price rose only slightly today despite the Federal Reserve announcing an extension of government bond buying. Unlike past rounds of quantitative easing (QE) which instantly boosted the U.S. Gold market, analysts are predicting a slow climb for the yellow metal as further economic stimulus is expected to further weaken the dollar and drive up Precious Metals prices. Jeffrey Wright of Global Hunter Securities said the news of continued QE will “support Gold well into 2013, with volatile trading patterns along with profit-taking periods as well.”

The initial forecast of $40 billion worth of monthly mortgage-backed bond purchases announced in September was augmented today with the Fed announcing additional monthly purchases of $45 billion worth of treasury securities. For the first time, the Fed has quantified its expectations for QE by announcing that the aim is to continue its monetary easing strategy until unemployment drops to 6.5 percent. Alex Merk, chief investment officer of Merk Funds, said, “It takes a little while to sink in that the Federal Reserve is focusing more and more on employment and less and less on inflation.” Economists and financial analysts alike predict prolonged government spending to be bullish for Gold.

The stock market ended the day down a couple of points after Federal Reserve Chairman Ben Bernanke quashed investor confidence by stating that the most recent additions to the Fed’s bond-buying agenda cannot fully compensate for the impact of the fiscal cliff. Investors of both equities and Gold will await news of some sort of resolution to the end-of-year financial conundrum.

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

• Gold, $1712.80, Up $3.20.
• Silver, $33.53, Up $0.54.
• Platinum, $1646.60, Down $4.80.
• Palladium, $695.70, Down $1.10.

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