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Mid-Day Gold & Silver Market Report – 8/4/2011

MARGINAL IMPROVEMENT IN JOBS DATA FUELS RECESSION TALK

The main concern of economists regarding the jobless claims data is the proximity to the 400,000 range. There does not appear to be any good economic news that would lead them to think there would be a major drop in benefits claims. The downward trend is a step in the right direction, just not a big enough step in most analysts’ eyes. According to Scott Brown, Chief Economist at Raymond James in St. Petersburg, FL, "I don't think there's anything magical about 400,000... The four-week average is suggesting lackluster to modest job growth. We'd love to see them moving below 350,000. You're starting to hear more announcements of layoffs, but they're still relatively concentrated in a handful of large companies. The real problem is the lack of new hiring, which is absolutely critical. We've seen some improvement with smaller firms hiring more people again."

The stock markets are viewing a recession as likely, as prices have continued to decline, hitting their lowest points in almost two years. The concern has driven a number of investors to Treasuries, which is causing inflation concerns with the Swiss Franc and Japanese Yen. Mike Ryan, Chief Investment Strategist at UBS Wealth Management Americas, said, “The mood right now is gloomy…The burden of proof is for better data that show the economy is not falling into recession. Tomorrow’s payroll report is crucial. If we see another disappointment, the stock market will have significant downside from here.”

The concerns hitting the marketplace are influencing gold prices as well. The news that central banks are offering more incentive to offset global debt crises helps gold’s appeal as an asset that retains value in times of monetary depreciation. UBS released a statement to its investors that said, "The potential for additional safe-haven flows stemming from central bank interventions in FX (foreign exchange) markets adds a significant new dimension to our positive outlook for gold…Without doubt, it gives further weight to holding real hard assets over paper assets."

At 12:01 pm (CT) the APMEX precious metals spot prices were:

  • Gold - $1,656.30 – Down $9.00.
  • Silver - $39.79 – Down $2.03.
  • Platinum - $1,734.10 – Down $50.90.
  • Palladium - $754.50 – Down $42.60.

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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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