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Mid-Day Gold & Silver Market Report – 8/1/2011

DEFAULT FEARS WANE, DOWNGRADE FEARS INTENSIFY

A Congressional vote is expected to take place later this afternoon over raising the debt ceiling and is expected to pass with strong bipartisan support. Most markets, global and national, are showing signs of relief by dodging the default concerns from the debt ceiling deadline of August 2.The default concern may be alleviated to some extent, but the fear of a credit downgrade is still ever-present as the 2.4 trillion dollar deficit reduction program has not fully met the conditions set forth by credit rating agencies Moody’s and Standard and Poor’s. Phil Streible, Senior Market Strategist with futures broker Lind-Waldock in Chicago, said, "We avoided the possibility of a default, but now concerns are turning to a possible downgrade."

The fear associated with not raising the debt ceiling is being tempered by the debt ceiling agreement. However, a report showed manufacturing is weaker than expected. Manufacturing output fell from an estimated 54.9 to a 50.9. This report, from the Institute for Supply Management, is a concern as the median score is 50. If the reading is above 50, it means expansion. If it is below 50, it would mean contraction. This is an important characteristic in economic growth and has tie-ins to our Gross Domestic Product. Economists are concerned, but some also point to disappointing data being tied to debt ceiling talks, as it put a number of government contract jobs in a wait-and-see status. According to Joseph LaVorgna, chief U.S. economist at Deutsche Bank, "It's definitely bad. On the badness scale, a 10 being an unmitigated disaster, I'd probably make this a six… The only thing not bad is it looks like the debt ceiling is front and center in this. There were concerns about government contracts. Are people getting paid?”

At 12:15 pm (CT) the APMEX precious metals spot prices were:

  • Gold - $1,625.60 – Down $4.60.
  • Silver - $39.48 – Down $0.69.
  • Platinum - $1,795.00 – Up $9.70.
  • Palladium - $831.50 – Up $1.80.

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Disclaimer:
APMEX’s ‘Market Reports’ provide our readers with a review of spot price activity and some of the factors that may be affecting the market for precious metals, three times during the trading day. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The "News and Commentaries" are not intended as a comprehensive discussion and there may be other factors that may be affecting the financial marketplace. These "News and Commentaries" are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, to purchase or to sell any precious metal product. All orders, all purchases and all sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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