Morning Gold & Silver Market Report – 10/27/2011
EURO DEAL BOOSTS STOCKS; U.S. DEBT DEADLINE STILL LOOMS
Overnight trading was fairly volatile for gold and silver while platinum, palladium, and global stocks rallied on the news that leaders in the euro zone have agreed upon a plan to shore up Greece’s debt burden and to contain the debt crisis in the whole region. In the agreement, private bondholders will take a 50% write-down on their holdings of Greek debt, the European Financial Stability Facility will be increased to over 1 trillion euros, and there will be a recapitalization of European banks.
The weekly first-time jobless claims report showed a drop of 2,000, while the four-week moving average fell closer to the pivotal 400,000 mark. In a report that was very optimistic for a change, U.S. gross domestic product rose by 2.5% in the third quarter, showing that the economy is expanding at a rate that’s nearly double what it was for the second quarter. Inflation is also believed to be down to the 2.0% level, which is down from the 3.3% level in the second quarter.
With the ‘good’ news out there, investors tend to be willing to take on more risk in equities. Nikos Kavalis of RBS said, “Gold has had a mixed relationship with risk recently – euro strength has generally been supportive since the September sell-off. But more recently we saw the correlation break down and gold trade as a safe-haven asset once again … [I]n addition to the European debt problem, we are getting closer and closer to the November 23 deadline for the U.S. debt reduction deal. I cannot be bearish on gold at the moment.”
At 8:15 am (CT) the APMEX precious metals spot prices were:
- Gold - $1,726.80 – Up $1.30.
- Silver - $33.91 – Up $0.56.
- Platinum - $1,616.20 – Up $19.00.
- Palladium - $672.30 – Up $24.30.