Mid-Day Gold & Silver Market Report – 8/24/2011
CAUTION AND CONCERN AHEAD OF BERNANKE SPEECH; CBO PREDICTS SLOW GROWTH
Gold prices are dropping dramatically in morning trading largely due to profit taking. This same profit taking has driven gold futures down by 4%. Silver, platinum, and palladium are also experiencing sharp declines. Stock performance has been mixed so far, as investors are staying cautious ahead of a planned speech by Federal Reserve Chairman Ben Bernanke this Friday.
Anticipation is building for the speech that Bernanke will give at a meeting of international central bankers in Wyoming this Friday. At last year’s meeting, Bernanke hinted at the economic measures that eventually became QE2, and there is speculation that his speech this year will provide similar hints about a possible QE3. However, some analysts who are disappointed at what is perceived to be the failure of QE2 to remedy the U.S.’s economic problems are expressing doubt about another round of quantitative easing. In a recent research note, John Higgins, senior markets economist at Capital Economics, stated, “There is little reason to expect (the economy) to warm in the event of QE3, unless the Fed acted much more boldly than it has in the past.” Higgins also expressed the opinion that the same measures the Fed has used in the past would do little to boost economic growth now, saying that it would take something “far bigger.”
A report released today by the Congressional Budget Office predicts that economic growth will remain slow through 2012 and that the unemployment rate at 9.1% now will likely only drop to 8.5% a year from now. In the report, the CBO also estimates that the federal budget for this year will be $1.3 trillion, despite the deficit decreases that will be achieved in the wake of the budget deal reached in early August. The CBO warned that deficits could be even higher if the tax cuts enacted by former President George W. Bush are continued after their 2012 expiration.
At 12:22 PM (CT), the APMEX precious metals spot prices were:
· Gold - $1,761.40 - Down $101.70
· Silver - $39.37 - Down $3.04
· Platinum - $1,821.80 - Down $59.30
· Palladium - $744.00 - Down $22.30