Closing Gold & Silver Market Report – 2/6/2012
GREEK TRAGEDY BEFALLS STOCKS; TAX HIKE ON THE HORIZON?
Prices for Gold dropped today in response to a rise in the dollar fueled by Greece’s lack of progress in coming to a bailout agreement. Along with other U.S. equities, Gold’s decline comes amid renewed worries that a Greek default could be in the offing and that debt contagion would spread to other European countries. Jason Schenker, president of Prestige Economics LLC, said, “The dollar’s up because of worries over Greece and optimism surrounding the U.S. economy after the jobs report. In the long run, there are still a lot of downside risks to the dollar.” Gold historically has a negative correlation with the U.S. dollar, increasing in value as the dollar’s value drops. Silver, Platinum, and Palladium prices ended the day down, as well.
U.S. stocks also dropped today, weighed down by concerns over the ongoing debt crisis in Europe and the continued failure of political leaders in Greece to come up with a definitive plan for avoiding a national default. After advancing for five weeks in a row, the Standard & Poor’s 500 Index was down by 0.1 percent Monday afternoon. S&P’s Banks Industry Group Index was down nearly 1.14 percent. The Dow ended the day down 0.13 percent. In an interview today, chief market strategist Stephen Wood of Russell Investments said, “It’s an ongoing Greek tragedy. We’re in the hands of the best efforts of European politicians. That’s a source of risk that’s difficult to forecast.” The S&P 500’s drop today comes in what had been the market’s best year-opening start in 25 years.
Last week’s unexpected improvement in jobs numbers could result in an equally unexpected tax increase for many U.S. citizens. Due to the better-than-expected employment figures released Friday, speculation is growing that lawmakers in Washington will find themselves in another battle over the payroll tax cut, as some politicians may be reluctant to agree to another extension. The last showdown over the tax cut in December ended with an extension almost failing to pass the House of Representatives, despite passing the Senate with bipartisan support.
At 4:10 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,720.80 - Down $18.00.
- Silver - $33.75 - Down $0.07.
- Platinum - $1,630.50 - Down $2.40.
- Palladium - $707.50 - Down $2.40.