Morning Gold & Silver Market Report, 6/22/2012
GOLD STARTS REBOUND ON CREDIT DOWNGRADE OF BANKS
Precious Metals prices dropped throughout the day Thursday, largely on the Federal Reserve’s disappointing announcement and the late-day credit downgrade to a number of international and domestic banks. Analyst Nic Brown said, “Since August, September, Gold has been trading like any other commodity. The one thing that will support prices this year is the potential for further aggressive monetary stimulus in the United States, whether it is QE or a new policy. … The Fed may be forced into doing something. The fundamentals in the U.S. may be improving … but the European situation is managing to drag everyone else down with it.” However, according to the bank Fairfax, “The recent sell-off (in Gold) could well prove to be excessive … if risk aversion rises again in the coming months.”
Moody’s downgrade of 15 international and domestic banks had been anticipated by the banking industry but still is throwing a wrench in the plans, as the downgrades do affect the lending costs of these banks. Another key indicator of the downgrade is the banks that weren’t downgraded. Some observers said Moody’s intent with this downgrade was to, in some sense, laud the banks that are stable with secure bank deposits from its customers. Citigroup wrote, “The new ratings landscape could provide a competitive edge for higher rated firms. … Markets tend to discriminate more between issuers at lower ratings -- in terms of funding costs -- particularly during times of stress.” The fact that these banks were flagged previously helped to minimize market impact, but market impact is still felt.
At 9:01 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,569.00, Up $3.40.
- Silver, $26.91, Down $0.04.
- Platinum, $1,437.70, Down $2.90.
- Palladium, $608.90, Down $0.70.
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