Mid-Day Gold & Silver Market Report, 06/21/2012

Brandi Brundidge

6/21/2012 12:15:00 PM

FED INACTION PUTS DOWNWARD PRESSURE ON GOLD  

The Gold price was still moving lower during midday trading after the Federal Reserve’s announcement Wednesday that it would be extending Operation Twist but would not initiate a third round of quantitative easing. The decision to skip a new bond buy back program has led some to believe the Fed may start increasing interest rates earlier than its own comments have suggested. This expectation of rising interest rates is lifting the dollar and putting downward pressure on Gold. “Currently we’re seeing a bit of follow through from disappointed investors, but believe we should be finding support pretty soon,” Saxo Bank Vice President Ole Hansen said. “(Fed Chairman Ben) Bernanke left the door open and extended the expected period of low interest, which is good news for Gold. Overall I think the market is not ready to let go of Gold, as it still looks like one of the better bets should the economic outlook continue to deteriorate.”

The amount Spanish banks would need to survive an economic “worst case” scenario has come in at nearly 62 billion euros ($78 billion). This estimate is the result of a study done by two firms hired by the Spanish government to determine how much would be needed to clean up the banks. “The idea is this process improves visibility on how robust the capital base of the banks is, and that in turn helps to unlock the funding market for them,” said Marco Troiano at Berenberg Bank in London. “That’s why this is so important. But it remains to be seen whether it will be effective.”

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,571.30, Down $45.00.
• Silver, $27.05, Down $1.44.
• Platinum, $1,438.00, Down $30.80.
• Palladium, $609.10, Down $11.40.

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