Morning Gold & Silver Market Report – 10/21/2011
EU SUMMIT IN FOCUS; WHY ONE ANALYST CAN’T TRUST NEWS OUT OF EUROPE
In overnight trading, precious metals recovered from yesterday’s losses while stock futures are pushing upwards as well. All eyes are on the EU summit happening this Sunday and whether a resolution to the European debt crisis will come out of it. While the market seems to be pricing in such a resolution, Tobias Blattner of Daiwa Capital Markets believes that there may be a hurdle yet to be cleared. Blattner said, “We see a high risk that any final outcome will be a weak compromise, disappointing financial markets and increasing the pressure on [other eurozone countries at risk, such as] Italy, Spain, and eventually also France.”
Market volatility is high right now, as evidenced by the fact that the Dow Jones Industrial Average has closed the opposite direction from the previous day for the past ten days. Jeff Cox, Senior Writer for CNBC.com, says to not expect the volatility to go away while the eurozone debt crisis is still in the minds of investors. Cox says investors can’t believe anything they hear coming out of Europe, as the debt crisis has brought about conflicting headlines and confusion. It’s also not a quick fix, according to Bill Isaac of FTI Consulting. Isaac said, “Even if the Europeans come up with something very robust that shows they’re going to try to deal with the crisis, this is going to be a long slog. The problem is a bunch of countries are way overextended and somebody’s going to have to take some losses.”
The uncertainty in Europe has caused gold to be pulled in opposite directions all week. However, as Credit Agricole analyst Robin Bhar explains, “At the end of the day, gold has got the physical business that comes in on the dips, as well as investors so that should [support it at the current price.] But even if [the price does come down], if we get some more funding crises, you have to think there will be even stronger support down at those numbers, so I’m not worried.”
At 8:04 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,647.50 – Up $32.60.
- Silver - $31.42 – Up $1.10.
- Platinum - $1,512.90 – Up $22.50.
- Palladium - $620.80 – Up $34.40.