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Mid-Day Gold & Silver Market Report – 10/20/2011

INVESTORS COVER LOSSES ON EUROZONE’S INCONSISTENCIES

Precious metals have fallen a little in morning trading.  Conflicting news of this weekend’s meeting in Europe on the handling of Greece and other eurozone problems have confused investors, thus spurring the volatile market movements.  James Moore, Research Analyst at FastMarkets.com, explains, “Precious metals will see weakness as traders and investors look to maintain liquidity levels and cover margin requirements.”  Marshall Auerback of Pinetree Capital still has faith in gold and gives his explanation of the volatility, “We had a very significant run up in the gold price, so some correction is understandable.  But the conditions that created the run-up to $1,900/oz have not dissipated.  If anything, they’ve become more pronounced, notably the eurozone, where investors must begin to seriously consider the possibility of a break-up of the European monetary union and the implications that has for gold.” 

Wall Street has experienced the worst quarter since the 2008 crash with the S&P 500 dropping 14% during the period.  This is coupled with the continued flip-flop of news coming out of Europe concerning the debt crisis.  “If the European summit on the debt crisis is postponed, which is the rumor, that will unnerve the optimists…As this effort becomes more delayed, the likelihood that confidence will erode begins to increase with each postponement,” says Kevin Giddis, President of Fixed-Income Capital Markets at Morgan Keegan.  As a result of this, the dollar has grown stronger, making precious metals more expensive for investors.  “When risk appetite increases then there’s more (gold) selling,” says Carsten Fritsch, analyst at Commerzbank, also explaining that the drop in gold is to cover losses in other markets.

At 12:00 pm (CT) the APMEX precious metals spot prices were:

  • Gold - $1,612.20 – Down $36.80.
  • Silver - $30.20 – Down $1.12.
  • Platinum - $1,489.30 – Down $33.80.
  • Palladium - $586.10 – Down $24.30.

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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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