Morning Gold & Silver Report, 7/3/2012

Brandi Brundidge

7/3/2012 8:01:00 AM

STIMULUS TALK BOOSTS GOLD; AMERICAN ECONOMY DOWN, NOT OUT  

This morning, Gold and other Precious Metals are reaping the benefits of global stimulus expectations. In Europe, the European Central Bank (ECB) is expected to cut lending rates to record lows. After negative manufacturing reports came out in the United States, there has been more speculation about monetary easing by the Federal Reserve. “Over the last few weeks, U.S. numbers have worsened a lot, and this has brought about the probability of QE3, which is probably the most important reason for the market to believe in Gold,” Commerzbank analyst Eugen Weinberg said.

As for Europe, the news continues to be bleak. The ECB is expecting to cut interest rates to as low as 0.75 percent. The rate has never been lower than 1 percent in the history of the euro. “I think ECB President Mario Draghi saying that he is happy with the summit results is a strong sign that the ECB is ready to do something,” said Berenberg Bank’s Christian Schulz, who is forecasting a quarter-point cut.

Mixed signals are being sent regarding the future of the American economy. Lowered employment reports and a slowdown of manufacturing activity give reason to believe that America’s recovery has slowed to a stop. However, not all reports have been so negative. Construction spending has risen to its highest level since December 2009. Gary Schlossberg, chief economist at Wells Capital Management, said, “I think it’s interesting that the construction spending numbers do point to the fact that this recovery, such that it is, is being led increasingly by housing, which could provide some support to the economy later in the year.” 

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,619.20, Up $19.40.
• Silver, $28.08, Up $0.52.
• Platinum, $1,474.40, Up $17.60.
• Palladium, $592.80, Up $13.80.

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