Morning Gold & Silver Market Report – 11/1/2011
GREEK PRIME MINISTER SURPRISES EURO ZONE, CALLS FOR A VOTE
In overnight trading, precious metals are down as a result of a domino effect that started – where else? – in Europe. Greek Prime Minister George Papandreou shocked the euro zone when he called for a referendum on the bailout plan agreed upon last week. The Greek people have never been happy about the austerity measures put in place. Economists at Barclays Capital wrote, “The latest brinkmanship creates new uncertainty in the eyes of markets, which could be concerned that, should the outcome of the referendum be negative, then either Greece would have to restructure its debt much more aggressively than the 50% currently envisaged … or it could even pave the way for an eventual exit from the euro area.”
The fresh uncertainty out of the euro zone has caused the dollar to strengthen, which is holding down gold prices. “Prices succumbed to a stronger dollar as it makes dollar-denominated commodities look expensive for holders of other currencies,” Angel Broking analysts said in a note. “Even though gold is considered as a safe-haven asset … prices are mainly taking direction from risk sentiments in the global financial markets.”
A two-day meeting of the Federal Open Market Committee begins today. Changes are unlikely to come from the meeting, as the Fed is expected to hold steady. Chicago Fed chief Charles Evans, a voting member of the FOMC, said in a speech, “We should consider committing to keep short-term rates at zero until either the unemployment rate goes below 7 percent or the outlook for inflation over the medium term goes above 3 percent.” Though some may find that “risky,” he added, “But these are not ordinary times – we are in the aftermath of a financial crisis with massive output gaps, with stubborn debt overhangs and high degrees of household and business caution that are weighing on economic activity.”
At 8:00 a.m. (CT) the APMEX precious metals spot prices were:
- Gold - $1,691.30 – Down $35.90.
- Silver - $32.31 – Down $2.09.
- Platinum - $1,565.00 – Down $42.60.
- Palladium - $630.00 – Down $23.10.