Morning Gold & Silver Market Report – 10/7/2013
WEAKER DOLLAR BOOSTS GOLD FOR EARLY GAINS
Gold has benefited from a lower dollar as policymakers in Washington fail to reach a consensus on a budget bill. As the October 17 deadline for reaching the borrowing limit nears, investors and analysts await the potential for greater market volatility. The result of the budget impasse has been a partial government shutdown that is weakening the economy and delaying the release of key economic reports. "The whole story about the U.S. is clearly key for financial markets at the moment ...the general view on it is that a solution will be found and we will probably see a rebound in markets in general,” Credit Suisse analyst Karim Cherif said. "Sentiment remains hesitant towards Gold, which has been reflected in the market positioning," Barclays analysts said in a note. "While the temporary U.S. government shutdown has not proved to be a positive driver for prices, the risk of a debt ceiling breach holds scope to spark interest given Gold's response in 2011."
With Gold in the midst of its first bearish year in more than a decade, many economic experts and Gold bugs are currently baffled by this price action. Since its peak in 2011, Gold reserves at central banks have lost more than $545 billion in value but the banks continue to pile it on. In 2012, central banks added 535 tons of Gold bullion and are expected to add another 350 tons this year. However, as policymakers continued the onslaught of buying, investor sentiment wavered after reaching its all-time high. Now, many wonder if central banks are continuing their tradition of buying when they should be selling or if they see long term volatility and the need for their own insurance policy in the form of Gold.
At 8:43 a.m. (ET), the APMEX Precious Metals spot prices were:
- Gold, $1,326.00, Up $14.10.
- Silver, $22.25, Up $0.47.
- Platinum, $1,390.70, Up $3.70.
- Palladium, $699.40, Down $3.60.
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