Morning Gold & Silver Market Report – 11/22/2011
GDP GROWTH REVISED DOWNWARD; U.S. RECOVERY IN DOUBT?
In overnight trading and since the Closing Gold & Silver Market Report, precious metals prices have rallied to some extent, but the safe-haven appeal of gold seems to be on the rise due to the failure of the congressional Super Committee and the most recent news that Gross Domestic Product (GDP) data for the third quarter was revised from 2.5% to 2.0%. Tom Kendall, a Credit Suisse analyst, said, “There was a lot more activity in the Asian market this morning, and (there’s) the less aggressive selling across all asset classes, including gold. … Running up to today, gold’s been suffering because it’s a source of cash, of U.S. dollars. When balance sheets are under stress, if you need to raise dollars and you’re holding gold, it’s an easy instrument to use.”
The apparent failure of the Super Committee has triggered a tougher outlook on the U.S. recovery. The credit rating agencies Standard & Poor’s and Moody’s have both reaffirmed the U.S. outlook previously established. On the other hand, Fitch Ratings previously said that a Super Committee failure would likely result in a “negative rating action” and a review could be done by the end of the month. The deadlock drove stocks down and Treasuries higher Monday. There are concerns that political gridlock could put the nation’s fiscal well-being in doubt. In an e-mail message, former White House budget director Alice Rivlin wrote, “They could not agree even on the smaller challenge of $1.2 trillion. … I do not see a way to get to the big deal before the election, if then. It is really discouraging!”
The U.S. economy grew much slower than what was projected in previous estimates. Although the revision was for less in the third quarter, it sets up the fourth quarter for growth that could exceed 3%, which is the fastest growth in almost two years. This news, although not good, still exceeds the first quarter’s 1.3% growth. The biggest contributor was a revision to business inventories.
At 8:01 a.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,693.00 – Up $12.40.
- Silver - $31.73 – Up $0.56.
- Platinum - $1,557.90 – Up $14.10.
- Palladium - $589.70 – Up $1.90.