Mid-Day Gold & Silver Market Report – 8/6/2013
REDUCED GOLD PRODUCTION TO BOOST METALS PRICES?
Gold has fallen again today as the anticipated arrival of Fed stimulus tapering draws closer. Atlanta Federal Reserve Bank President Dennis Lockhart claimed that a reduction in the scale of monthly asset purchases could be announced at any of the forthcoming policy meetings. Though decreasing the level of quantitative easing (QE) is expected to put downward pressure on Precious Metals, the World Gold Council announced Monday that current Gold prices are already at the bottom. Analysts at Commerzbank said, “The WGC expects supply to tighten because Gold mining producers are cutting spending and shutting down high-cost mines. In the WGC’s view, mining production this year could remain at last year’s level and could subsequently even drop.” Tightened supply lines could cause prices to increase from current levels as the demand for physical Gold still remains high. However, investors will wait to see if reduced production can outweigh the bearish attitude surrounding Gold ETFs.
Stocks are down again today as concern over the expected end to current monetary easing volume has pushed the S&P 500 down for a second straight session. Though reports have indicated that the U.S. trade deficit contracted, showing stronger-than-expected second quarter growth, stocks are still reacting negatively to the belief that QE is near its end. “Certainly some of the move is due to increased concern about tapering due to the very strong trade number,” Paul Zemsky, head of asset allocation for ING Investment Management, said. “It’s puzzling to me why better GDP growth would be bad for the equity market, but there are some who view it this way. Longer term, we need to see revenue growth, and stronger GDP will deliver that.”
At 1:22 p.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,285.30, Down $19.10.
- Silver, $19.63, Down $0.18.
- Platinum, $1,430.50, Down $18.60.
- Palladium, $724.30, Down $12.40.
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