Mid-Day Gold & Silver Market Report – 1/12/2012
U.S. MUST JUMP ECONOMIC HURDLES TO GROW
Gold and Silver prices were stable through the morning. Gold’s price is related to Europe’s financial position and the current value of the U.S. dollar. Analysts with Commerzbank wrote a note to clients that said, “Gold remains very firm in contrast to the weakness-prone equity and commodities markets.”
The U.S economy is facing several obstacles to successful growth. The problems include a high unemployment rate, low demand in the housing market, and the European debt crisis. Two main reasons why the unemployment rate is still an issue is that job-seekers are losing confidence and dropping out of the labor force, and businesses are facing difficulties finding skilled workers. The housing market is still in a slump that started in 2008. The number of foreclosures and a decline in home purchases has fueled the slump. U.S. banks are affected by Europe’s debt crisis in part because money market mutual funds have invested in Europe’s short-term debt securities. Richmond Fed President Jeffrey Lacker said, “The major vulnerability of our financial system has to do with involvement of money market funds. Until we fix the structure there, we’re vulnerable to flights. Our job is to keep inflation low and stable. In general, the growth rate the economy can crank out is determined by technology, people’s preferences, resource endowments, and other policies.”
The European Central Bank met today and, as expected, kept the key lending rate the same. Currency strategists at Commerzbank said in a note, “We assume that at today’s press conference following the rate decision, (ECB President Mario) Draghi will again not raise expectations of further bond purchases. Moreover, other far-reaching measures of monetary easing also seem unlikely today, as many of the measures just decided at the last meeting have not even been implemented yet.”
At noon (CST), the APMEX precious metals spot prices were:
- Gold - $1,654.90 – Up $14.40.
- Silver - $30.33 – Up $0.38.
- Platinum - $1,499.00 – Up $2.30.
- Palladium - $641.80 – Down $4.90.