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Morning Gold & Silver Market Report – 1/4/2012

IRAN SANCTIONS START TO TAKE TOLL; EURO FALLS   

Overnight trading has been relatively choppy, as prices have hovered around their current levels with slight up and down movements in price. Gold correlated with the euro’s rally over the last couple of days, but with that rally ending, consumer demand and Iranian concerns are providing support. “The physical demand side of things will be the big factor helping to take prices back up again, along with dollar weakness,” said Daniel Smith, commodities analyst at Standard Chartered. “It's difficult to have a strong view around Europe, just because people are already quite pessimistic. So I’m not sure things will get worse, so (the view is) a bit neutral. ... I tend to think the risks are skewed to the upside with Gold.”

The financial sanctions imposed by the United States and the European Union have started to affect Iran quite negatively. The sanctions being imposed basically cut off the ability of Iran to collect payment for oil exports. Iran stands behind its claims that its nuclear research has a peaceful intent, while other countries, including the U.S. tend to disagree with that assessment. Iran’s currency has fallen 40% against the U.S. dollar. Oil prices are up 4%.

The European Central Bank (ECB) continues to lend money at a very low 1% interest rate to European banks. The issue now is whether that cash flow actually is helping the sovereign debt crisis or is just being hoarded by banks. Overnight deposits to the ECB have reached a record-high 453 billion euros (equivalent to $591 billion U.S. dollars). The issue is a lack of trust in lending between banks. That lack of trust is leading the ECB to have fears of a potential credit crunch within the eurozone, which would be detrimental to the hopes of climbing out of the debt crisis.

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

  • Gold - $1,598.20 – Down $3.30.
  • Silver - $29.20 – Down $0.45.
  • Platinum - $1,421.20 – Down $9.30.
  • Palladium - $657.60 – Down $6.90.

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Disclaimer:
APMEX 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. 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 Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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