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Mid-Day Gold & Silver Market Report – 10/31/2011

ITALY SQUARELY IN DEBT CRISIS’S CROSSHAIRS

Precious metals prices have remained steady since the Morning Gold & Silver Market Report. The currency market is having a definite influence with Japan’s move to strengthen the yen. However, the biggest news continues to lay in Europe as last week’s summit’s goodwill has quickly evaporated thanks in large part to Italy’s poor bond performance. When the U.S. bond performance outperforms the stock market, such poor performance from Italy certainly raises a cautionary flag. "The huge spike in the dollar is pressuring gold prices," said Ong Yi Ling, an analyst at Phillip Futures. "But so long as gold stays above $1,700, the sentiment should remain pretty bullish."

With Greece being such a point of emphasis, some of the other countries have been able to lie low to some extent. But, as has been evident over the last few months, when Greece falls from the limelight, new countries seem to pick up the torch and run with it. Italy recently passed legislation late last week for its own austerity measures, including raising the retirement age to 67. Incoming European Central Bank (ECB) President Mario Draghi, called the measures “an important step ... but now it’s time to implement the measures swiftly and concretely.” Almost immediately, most analysts and experts denounced these measures. As Antonio Polito wrote in the local newspaper Corriere della Sera, "It's hard to believe that yesterday's intentions can really be transformed into the biggest plan of market reforms Italy has ever put on paper." Today, bond yields in the embattled country have reached levels not seen since the ECB stepped in two months ago to shore up Italy’s debt markets. It seems Italy will be the new epicenter of the ongoing European debt crisis. Luca Cordero di Montezemolo, chairman of Ferrari, wrote in a letter that Italy had reached "the point of no return. … There is not a minute to lose. The savings of Italian people, social cohesion and Italy's membership of the euro are all at risk. … We do not have time to wait for the natural evolution of the political situation. … The prime minister has to realize that the only way to save the country is through a government of public safety."

Concern in Europe has spread to the U.S. “We’re not out of the woods yet,” Jeffrey Saut of Raymond James & Associates said in a telephone interview. “Europe did get a rescue that buys them more time, but they are not anywhere near a resolution to their crisis. In addition, we’ve been on a buying stampede. The market was due for a pullback.”

At 12:00 PM (CT) the APMEX precious metals spot prices were:

  • Gold - $1,723.50 – Down $25.70.
  • Silver - $34.23 – Down $1.10.
  • Platinum - $1,609.60 – Down $42.20.
  • Palladium - $652.70 – Down $17.60.

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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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