Morning Gold & Silver Market Report – 8/11/2011
New U.S. claims for unemployment benefits dropped by 7,000, thus reaching a four month low. This was a better than expected result as expectations were for a slight upswing in benefits claims. The current seasonally adjusted total is 395,000. The four-week moving average for claims, which is considered to be the most important measure, dropped 3,250 to 405,000.
The positive jobless claims is somewhat offset by an unexpected widening in the U.S. trade gap. In June, the trade gap widened to its largest gap since October 2008, which is an indicator of a slowing global economy. Both U.S. imports and exports registered a decline.
Dow futures were up in early morning activity, but they along with global stocks are now retreating on continued concerns with the European banking system. The equities markets continue to be nervous, fast acting and volatile. The euro has fallen to a five-month low against a low-yielding yen, oil is going lower, and Italian and Spanish government bonds are higher due to the purchasing activities of the European Central Bank. The French banks continue to be under scrutiny despite assurances from credit rating agencies that their credit rating is not in jeopardy. There is a general distrust of the voices that come out and attempt to dissuade concerns that French banks are overexposed.
The Chicago Mercantile Exchange’s (CME) decision to raise gold trading margins is not expected to damper the world’s enthusiasm for gold. Gold prices were near record highs while trading in Asian markets on Thursday. "There's no way gold is going to come off anytime soon, regardless of how much the margins actually go up," said Kelvin Tay, Chief Investment Strategist at UBS Wealth Management Singapore. "You also have to consider the fact that (there is a) real lack of alternatives right now."
India, who is the world’s largest buyer of gold, is certainly not slowing down. In India, gold is most often purchased in the form of jewelry, and Indians are buying jewelry at a record pace despite record high prices. This is an important reminder the gold has a global market, and unlike stocks and bonds, you can buy and sell anywhere in the world, no matter how remote. Gold prices form from world demand and not any individual country.
At 8:15 AM (CT) the APMEX precious metal prices were:
- Gold price - $1,773.80 – down $12.30
- Silver price - $38.74 – down 70 cents
- Platinum price - $1,784.90 –up $13.20
- Palladium price - $732.50 – up $3.80