GOLD PRICES BACK TO WHERE THEY STARTED THE WEEK
This week saw some ups and downs in the Gold value. At the beginning of the week, Gold held steady as many economists questioned why Gold has not seen a higher rise based on the actions of central banks around the world. From the United States, Europe and China, the clear route has been steady monetary easing. “It seems as if accommodative monetary policies are here to stay for some time,” Lance Roberts, chief executive officer of Streettalk Advisors LLC in Houston, said. In the past, easing has supported the value of Precious Metals, and many believe it will continue to do so. Even with downward pressure being applied by strong jobs data and record equity levels, Precious Metals prices remain up slightly at Wednesday closing. As stock indexes reach all-time highs, many analysts are concerned that the recent rally has climbed too high in such a short amount of time. This fear, along with the expectation of the European Central Bank, the Bank of England, the Bank of Japan and the U.S. Federal Reserve to maintain liberal monetary easing policies, has popped Gold up today and both factors are expected to prove bullish for Gold long-term. Gold seemed poised to have a relatively uneventful week until today’s release of the February jobs report, which proved to be better than expected. The report shows 236,000 jobs added to the workforce in February, with the unemployment rate falling to 7.7 percent. The United States Federal Reserve has been very vocal regarding the correlation between their monetary easing program and the unemployment rate. With the positive jobs report, there is speculation that the Fed may start decreasing the easing and in turn cause a drop in Gold’s market value. The swift reactive drop in Gold, triggered by non-farms payroll data, was short lived. “The market interpreted today’s jobs data as being bearish for Gold, and the metal initially sold off as expected,” Gold Newsletter Editor Brien Lundin said. “But the downturn failed to gain momentum, and this indicates that the selling has been exhausted.” The lower overall Gold price in 2013 has created a strong buying opportunity for both central banks and individual investors.
BULLISH GOLD REPORTS
Investment firms continue to provide their outlook for Gold with the latest two offering similar predictions. Bank of America Merrill Lynch estimates Gold will reach $1,680 an ounce in 2013 and $1,838 an ounce in 2014. Previous estimates had Gold reaching $2,000 an ounce by Q2 2013. “After a multi-year rally, Gold prices have been range-bound for several quarters,” Michael Widmer, Bank of America Merrill Lynch’s metals strategist, said. “In our view, headwinds to Gold prices will persist in the near term.” Morgan Stanley remains bullish for the yellow metal as they suggest the current prices provide a buying opportunity for investors. Morgan Stanley Chief Metals Economist Peter Richardson said, “In these circumstances, we believe that Gold has demonstrated considerable technical strength, offers good value at current prices both as an entry level to the trading range between US$1,540/oz and US$1,800/oz and as an option on any remaining upside surprise above this range that might result from the third part of the Great Monetary Easing.” To back up these reports, the U.S. Mint released its sales totals from February, showing a year over year increase of 240 percent from February 2012 in mintage and sales of the 1 oz Gold American Eagle, the largest year over year increase in any monthly sales since the financial crisis of 2008. This followed the January year over year increase of 47 percent in mintage and sales of the same Gold coins. In a similar manner, the Mint reported an increase of 126 percent in the mintage and sales of the 1 oz Silver American Eagle, the largest year over year increase in sales during the month of February since the financial crisis in 2008. For January 2013, the increase in sales of the Silver coin was 23 percent as compared to the sales in January 2012. “The increase in sales by the United States Mint of the 1 oz Gold and Silver coins is evidence of the significant demand for the physical precious metals in the market place. According to the communications with our customers, more buyers are turning to physical Gold and Silver because of concerns over the U.S. debt and the crisis this huge debt level may bring to the U.S. economy over the next several years,” APMEX CEO Michael Haynes said.
At 5:00 pm (EDT), the APMEX precious metals spot prices were:
- Gold, $1579.90, Up $2.80.
- Silver, $29.01, Up $0.15.
- Platinum, $1607.40, Up $10.30.
- Palladium, $782.00, Up $23.90.
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