Mid-Day Gold & Silver Market Report – 10/19/2011

EURO ZONE DEBT TALKS STALL, GOLD DROPS

Gold and precious metals prices have fluctuated on news that euro zone debt talks have stalled, as well as the U.S. government’s action to limit speculation in commodities markets. According to Richard Hastings, Macro Strategist at Global Hunter Securities, “Gold prices are still right on trend despite the big drop yesterday on the CFTC [U.S. Commodities Futures Trading Commision] and demand news.”

The euro zone debt crisis continues to put pressure on global markets. The hold up right now surrounds a disagreement between France and Germany on the amount of bailout funds. The issue surrounds how the euro zone countries want to use the funds available in the European Financial Stability Facility (EFSF). France would rather it be used almost as a bank, while Germany opposes that idea. It’s not a matter of convincing Chancellor Merkel, it’s a matter of convincing the German officials. Merkel has reiterated her stance that this will not be resolved in “one stroke.” She also said, "If the euro fails, Europe fails but we will not allow that.” Greece continues to violently oppose the austerity measures being forced upon the country.

The United States passed its toughest legislation to date to curtail speculative buying in the commodities market. There will be a limit on futures and swap contracts any single trader can hold. Although this is a relief to traders it has already impacted prices. The impact is being felt in all commodities, not just gold.

At 12:03 PM (CT) the APMEX precious metals spot prices were:

• Gold - $1,649.20 – Down $5.60.
• Silver - $31.39 – Down $0.48.
• Platinum - $1,523.20 – Down $17.50.
• Palladium - $610.60 – Down $11.30.