Closing Gold & Silver Market Report – 1/16/2012
GOOD NEWS, BAD NEWS SHAPES EUROZONE
Precious metals prices have been relatively stable this afternoon in global markets. Gold continues to look like a good choice for investors, as prices are still up 5% this month. The fear continues to revolve around the eurozone debt crisis. Analyst Peter Fertig said, “Gold is not a hedge against problems in the eurozone, at least as far as the debt situation is concerned. That might look different in the worst-case scenario.” In the past year, Gold saw some benefit from fears over currency debasement, but at times it also fell victim to the rising U.S. dollar. There will be volatility ahead, good and bad.
The potentially good news out of the eurozone earlier today revolved around the surprising results of a French bond sale, which was surprisingly brisk considering that nation’s rating downgrade Friday. Fixed-income strategist Orlando Green said, “The bill auctions have been carried out without a problem, which is helpful for market sentiment toward the euro area. … The reaction to the S&P downgrade has been somewhat muted. The move wasn’t a surprise and was well-flagged for a number of the issuers.”
The potentially bad news out of the eurozone is the fear of a Greek default, as austerity talks continue to remain at a standstill. The international demands for help are viewed as steep. This also has led to worries that Greece could potentially leave the euro, as well. Greek Prime Minister Lucas Papademos told reporters, “There is a little pause in these discussions. … But I am confident that they will continue and we will reach an agreement that is mutually acceptable in time.” That timeline appears to be two to three weeks, the prime minister said. Another key element that bears watching is how a credit rating downgrade Monday will affect the European Financial Stability Facility (EFSF), which is the eurozone’s bailout fund. The contingency now falls on whether the other two major credit-rating agencies downgrade either the EFSF or another AAA-rated European country. But if the EFSF is needed to bail out Spain and Italy, any shortfall due to rating downgrades would not really matter, as the cost would be about 1 trillion euros, much more than the fund’s ability to provide.
At the holiday closing time of 12:15 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,644.50 – Up $12.70.
- Silver - $30.02 – Up $0.43.
- Platinum - $1,501.00 – Up $13.20.
- Palladium - $641.20 – Up $5.20.