Morning Gold & Silver Market Report – 1/18/2012

IMF TO INCREASE EURO LENDING; GEOPOLITICAL TENSIONS ABOUND  

U.S. stock futures are up mildly, while precious metals prices are dipping slightly after the release of economic data this morning. Wholesale prices, a key gauge of inflation, fell by 0.1% in the U.S. However, this decline in prices is only due to large dips in food and energy costs, which are stripped out when the core wholesale prices are calculated. This core price rose 0.3%, a spike that is higher than normal.

Rumors that the International Monetary Fund could be increasing its lending capacity to Europe by $500 to $600 billion are supporting markets across the board today. Andrey Kryuchenkov of VTB Capital said this is good news for Gold. “The safe haven status quo continues to hold its ground as troubles in the eurozone are far from being resolved,” he said. “Further easing in the eurozone and accommodative monetary policies would be bullion-supportive.” This news could also drive up the euro’s value, and Peter Fertig of Quantitative Commodity Research Ltd. said, “A weaker U.S. dollar should be supportive for Gold.”

A quick glance at world news this morning is a reminder that geopolitical tensions are still very active, which could also support the safe-haven appeal of Gold. Pakistan has denied a visit to that country by a U.S. ambassador. Pakistan still has problems with India, and India still has problems with China. The revolution in Syria presses on with more bloodshed. Iran says negotiations are under way regarding its nuclear program, while Israel says it is far from a decision about attacking Iran because of the nuclear activity.

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

• Gold - $1,647.00 – Down $9.80.
• Silver - $30.17 – Down $0.05.
• Platinum - $1,509.80 – Down $17.90.
• Palladium - $649.10 – Down $7.40.