Mid-Day Gold & Silver Report, 7/9/2012

Brandi Brundidge

7/9/2012 12:03:00 PM

GOLD LOWER TO START WEEK; EURO RECOVERY IN TIME CRUNCH 

Gold started the week lower due to a lack of direction in many economic factors. When the United States’ employment report came out Friday, it showed very little improvement. However, it may have been just enough to keep the idea of another round of monetary easing off the table for the Federal Reserve. “The market is not sure where prices should go and the sentiment is fragile,” said Lynette Tan, an analyst at Phillip Futures. “Prices are likely to remain rangebound for the time being with investors stuck in data watching mode,” she said.

In Europe, the agreement among the leaders of all the nations to work together was a step in the right direction for economic recovery. The issue is now a matter of time. As negative data pour in on the European economy, the window to reverse course is getting smaller. American economist Peter Garber had thoughts about this in 2010 when the crisis started. He said in a report, “The problem is that at the time of a sovereign debt crisis, large portions of a national balance sheet may suddenly flee to the ECB’s (European Central Bank’s) books, possibly overwhelming the capacity of a bailout fund to absorb the entire hit.”

When United States Federal Reserve Chairman Ben Bernanke announced the Fed was extending Operation Twist, it seemed cut and dried. The Fed buys bonds from banks to help stimulate the economy. There is an issue that has been overlooked, however. “People are not willing to sell Treasuries. The data in the U.S. doesn’t look as good. The labor market has lost momentum. There will be more upside left in Treasuries despite the low levels of rates,” said Thanos Bardas, a managing director at Neuberger Berman LLC in Chicago. This glitch could put a hamper on recovery efforts.

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

• Gold, $1,590.00, Up $9.60.
• Silver, $27.47, Up $0.48.
• Platinum, $1,449.00, Down $0.50.
• Palladium, $584.80, Up $3.50.

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