Mid-Day Gold & Silver Market Report – 09/11/2012
GOLD LIFTED BY WEAKER DOLLAR, U.S. DEBT CONCERNS GROW
Gold continues to stay in positive territory through mid-day trading as the U.S. dollar continues to weaken against the euro. Warnings regarding U.S. creditworthiness have added to the expectation the Federal Reserve will take action, encouraging Gold demand. "The overwhelming consensus is in favor of more (quantitative easing) in a significant way. Let's assume that happens. Gold is going to go higher, and $1,800 looks very likely in the short term, but partly because the inflation risks are higher than they were," Daniel Smith, an analyst at Standard Chartered, said.
Credit rating agency Moody’s has warned that the U.S. may lose its Aaa credit rating if next year’s budget policies do not show a pattern of reducing the national debt over time. If budget talks "lead to specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term, the rating will likely be affirmed and the outlook returned to stable," Moody's said in an emailed statement. "If those negotiations fail to produce such policies, however, Moody's would expect to lower the rating, probably to Aa1." Last year rival Standard & Poor’s downgraded the U.S. credit from its top rating.
The broader U.S. stock market is also moving up on the expectation of action by the Federal Reserve, with the S&P 500 up nearly one half percent by mid day. The S&P 500 30-day moving average is up almost 17 percent. “The market is anticipating that there will be some stimulus move on the part of the Fed,” John Praveen at Prudential International Investments Advisers said. “The market is grinding higher on liquidity because of what central banks have done and on hopes of further stimulus from the Fed and positive moves from European policy makers.”
At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1733.50, Up $4.70.
- Silver, $33.65, Up $0.02.
- Platinum, $1,610.10, Up $5.30.
- Palladium, $674.50, Up $1.70.
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