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Morning Gold & Silver Market Report – 11/17/2011

CENTRAL BANKS’ GOLD DEMAND WAY UP IN THIRD QUARTER

According to a quarterly report just released by the World Gold Council, central banks have purchased more gold in the third quarter than they have in decades. Although the council cannot reveal the details regarding these purchases, it did say a “slew of new entrants emerged wishing to bolster gold holdings.” As prices dipped in September, gold became even more appealing to central banks.

Overall in the third quarter, demand for gold rose 6%, and for the first time, China surpassed India as the largest consumer for gold jewelry. Considering all the events surrounding the escalating European debt crisis, it is not surprising that European purchases of gold bars and coins more than doubled in the third quarter. Marcus Grubb, managing director at the World Gold Council, said, “If you look at Q3 in bars and coins, Europe was the biggest investment region in the world. All of that adds up to the concerns about the currency, and the eurozone triggered a real spike in European gold investment in Q3.”

If all this gold buying occurred in the third quarter, then why are gold prices dipping this morning? It still goes back to the eurozone. The situation continues to escalate, and fears are growing that this debt contagion could move from the peripheral (smaller) economies to the core economies. Not only has this pushed down the euro’s value, by default it has pushed up the value of the U.S. dollar. Nervous investors also are selling their profitable gold positions to cover losses in other asset classes.

At 8 a.m. (CST), the APMEX precious metals prices were:

  • Gold price - $1,751.00 – Down $25.30.
  • Silver price - $33.19 – Down $0.68.
  • Platinum price - $1,608.30 – Down $22.90.
  • Palladium price - $637.00 - Down $19.50.

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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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