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Mid-Day Gold & Silver Market Report – 1/17/2012

EUROPE’S BANKS CURB LENDING; CHINESE DATA BUOYS INVESTORS   

Since today’s opening bell, precious metals prices have remained steady or up for the day. Gold seems to be benefiting from the less-than-stellar trade deficit data out of China, which is boosting American markets. The euro debt crisis continues, but the good German economic data has boosted the euro. Gold’s rise actually has come without the benefit of a weaker dollar. However, projections from consultant GFMS still show Gold potentially reaching or exceeding $2,000 per ounce later this year or in early 2013.

The International Monetary Fund and European Union may have to step in with additional funds to help stem any potential banking crisis in Eastern Europe due to the fact that European banks are looking to cut assets. This is more of a banking move, but with the movement by banks to create higher capital, economic growth can be diminished when funds are not available for lending. This is one of the ripple effects created by the current debt crisis. If banks need to raise more capital for the euro debt crisis, they can’t go out and lend funds. And if banks aren’t lending, economies aren’t growing. Things such as restaurants, hotels, and businesses in general can’t grow without the lending. Chief economist Erik Berglof said, “There is a very strong impact of this; a potentially strong impact. … You have the headquarters making decisions on assets that are very small when you look at the total balance sheet. But when you look at the subsidiaries in Eastern Europe, they are systemic in the countries where they operate.” The message is pretty strong from smaller countries, such as Albania, whose central bank governor, Ardian Fullani, implores foreign banks to not “put everyone in the same pot” and to “give stimulus to the right countries.”

Though China’s economy is expanding, it was clearly at its weakest growth in almost three years. The slow growth could push officials to try to boost growth. This is seen as advantageous for investors as “the threat of the eurozone appears ever so slowly to be easing, and China’s data left investors feeling pretty warm. … All in all, there’s a pretty decent backdrop to the investing climate.”

At noon (CST), the APMEX precious metals spot prices were:

  • Gold - $1,657.50 – Up $25.70.
  • Silver - $30.19 – Up $0.60.
  • Platinum - $1,528.30 – Up $40.50.
  • Palladium - $657.50 – Up $21.40.

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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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