Closing Gold & Silver Market Report, 05/31/2012

Robert Davis

5/31/2012 4:02:00 PM

TREASURY YIELDS AT ALL TIME LOW AS INVESTORS FLEE RISK  

Interest rates on 10 year Treasury bonds hit their lowest point ever today as more investors fled risky assets, also driving stocks to continue their recent slump. Interest rates on bonds fall when there is greater demand in the market. “If you look at the global marketplace, we are the supermarket of safety,” said William Larkin, a fixed income money manager for Cabot Money Management Inc. “We’re talking about an elevated level of fear. This is mainly driven by growing uncertainty in Europe. People are saying, ‘I can buy the Treasury and I know my money will be returned to me.’ ” Gold also tends to be a fear-based investment, as people seek a store of value in times of uncertainty.

Crude oil also continued its slide, falling below $87 a barrel. Overall, oil futures slid 17 percent for May, the largest monthly decline in crude prices since the height of the financial crisis, when demand fell dramatically. The recent downturn in prices also seems to be due to a decline in demand. “This fresh downward pressure we see [in oil] is not about global supply risk, which has already been priced in, but is rather about demand weakness,” said Seth Rabinowitz, who oversees commodities as a partner at Silicon Associates. Rabinowitz cited weak economic data in America, the eurozone, and India as key indicators of slow demand.

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,561.00, Down $4.20.
• Silver, $27.77, Down $0.30.
• Platinum, $1,417.30, Up $14.10.
• Palladium, $612.40, Up $5.90.

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