Morning Gold & Silver Market Report, 7/24/2012
CREDIT OUTLOOK DIMS FOR GERMANY; U.S. FISCAL CLIFF LOOMS
Precious Metals continue to hold firm in the serious headwinds affecting other commodities markets. Gold in particular has been relatively range bound, but in the current market conditions that’s not an entirely bad thing. Analyst Hayden Atkins said, “Markets sold off really heavily yesterday, and Gold held up pretty well against that. It is maybe the one thing that has really stayed solid against some pretty solid headwinds elsewhere.” Meanwhile the issues facing the euro have actually helped Gold in the eurozone, as evidenced by Commerzbank’s note to investors: “Thanks to the euro’s depreciation vis a vis the U.S. dollar, Gold in euro terms has been making gains for some time now. Since mid-May, an upswing has become evident, which in the current market environment should take the yellow metal on a further upward trajectory.”
Meanwhile, Moody’s downgraded a few of the remaining AAA rated countries in the eurozone. Those countries are Germany, the Netherlands and Luxembourg. These are basically the main countries that would provide assistance to other countries in the region that could need financial assistance. The service released a statement saying, “Moody’s now has negative outlooks on those AAA-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support — whether because of the need to expand the European Stability Mechanism (ESM) or the need to develop more ad hoc forms of liquidity support.”
U.S. Treasury Secretary Timothy Geithner already has begun speaking toward the potential outcome of kicking the can down the road with the current fiscal situation. In an interview yesterday he said, “Many people who look at this say that, yes, you’d at least get a recession out of this. The cumulative size of those cuts -- tax increases and spending cuts -- are very, very large relative to the economy.” He also warned that any governmental failure could be quite damaging, relating it to the negative effect of the downgrade of the United States’ credit rating last year over debt ceiling talks. He said, “You saw huge damage to consumer confidence, to business confidence, and to confidence around the world in the United States because you had people in public office threatening to default on our nation's obligations.”
At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,579.90, Up $1.00.
- Silver, $27.06, Down $0.08.
- Platinum, $1,397.60, Down $1.30.
- Palladium, $569.40, Down $2.60.
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