Morning Gold & Silver Market Report – 8/25/2011
Gold Prices Continue to Move Down Overnight, then Stabilize in Early Morning Trading
Gold price headed towards $1,700 in overnight trading, but is strengthening in early morning trading, now sitting above $1,730. Platinum prices were below $1,800, but have bounced back over $1,810. Silver and palladium have rallied from negative territory and currently sit positive. One year ago, as investors anxiously awaited Ben Bernanke’s Jackson Hole speech, gold prices were at $950 per ounce. Many analysts had predicted a pullback in gold prices due to its rapid climb, but most categorize this as a correction because the same factors that drove investors to safe havens are still in play long term.
The weekly jobless claim just came out this morning and once again the economists are wrong. They had expected a decline of 3,000, but instead saw an increase of 5,000 to 417,000. This surprise is attributed to the strike by Verizon workers, but it begs the question didn’t the economists realize Verizon workers were on strike? The Labor department does reassure us that this is still nowhere close to a level that would indicate a recession. Stock futures had been rising, but have pulled back on the jobless claims report.
The CME raised maintenance margins for trading COMEX 100 oz gold futures by 27%. Even though margin is going up 27%, here is how it breaks down: 30 days ago when gold was around $1,600 the margin represented 3.4% of contract value. Now, with gold in the $1,730 range, this represents 4% of contract value. There has been an increase, but perhaps not as significant as the 27% would indicate.
At 8AM (CT) the APMEX precious metal prices were:
- Gold price - $1,739.80 – down $19.50
- Silver price - $39.89 – up 62 cents
- Platinum price - $1,806.00 – down $21.30
- Palladium price - $747.20 – up $2.10