Morning Gold & Silver Market Report – 9/12/2011
CONCERNS OVER EUROZONE HAVE INVESTORS CASHING IN
Precious metals dipped in overnight trading, as gold’s mostly-negative correlation to the dollar held true. The dollar is still strengthening thanks to concerns over the debt situation in Europe, which is also bringing global stocks and U.S. stock futures down. A strategist from City Index believes that the U.S. markets will follow Europe’s markets leading up to next week’s Federal Open Market Committee meeting. Investors await a show of support from the Federal Reserve, and that could be the time it is given.
Concerns in Europe are set up like dominoes. There were rumors that Greece would default on its debt this past weekend. While that didn’t happen, the issues in Greece are well-known. French banks are at risk of a credit-rating downgrade by Moody’s due to their exposure to Greek debt. Germany’s finance ministry is planning to support its major banks in the event Greece defaults. Friday’s resignation of the European Central Bank’s Chief Economist, Juergen Stark, has a place in the situation also.
It’s not a rare occurrence to see gold dip after large losses in equities. Many investors will “cash in” their insurance policy of gold to make up for losses they’ve sustained in the stock market. Bloomberg reports that gold is up 30 percent this year, and it has outperformed stocks on a global scale, as well as commodities and Treasuries. Edel Tully of UBS AG wrote that a stronger dollar could hold gold back, however, “gold should benefit from the scaling back of risk appetite on what appear to be rising fears of a Greek default, contagion to the rest of the periphery, and the impact on banks.”
At 8:00 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,840.60 – Down $20.90.
- Silver - $40.73 – Down $0.96.
- Platinum - $1,817.30 – Down $21.60.
- Palladium - $725.70 – Down $12.90.