Mid-Day Gold & Silver Market Report, 7/12/2012

Brandi Brundidge

7/12/2012 12:05:00 PM

LACK OF FED DIRECTION STILL WEIGHING ON GOLD  

The minutes from June’s Federal Open Market Committee meeting released yesterday are still weighing on Precious Metals markets today. While the Fed does appear to be open to buying Treasury bonds, it is still not of a mind to take additional action. “It is a case that any hints, any clues that are coming out of the Fed over when they might do it, whether they might do it, are absolutely central to Gold prices. There have been a few comments by FOMC members suggesting they are more prepared for QE (quantitative easing), but the Fed minutes we got last night gave a much more balanced, more neutral view of things,” said Nic Brown of Natixis. Since the inception of quantitative easing in 2008, Gold prices have more than doubled.

Joining the ranks of those who believe Gold is undervalued is investment bank Merrill Lynch, which is expecting the Federal Reserve to act in the second half of this year. In an appearance Thursday on CNBC, Francisco Blanch, head of Global Commodity and Multi Asset Strategy Research at Merrill Lynch, said, “We think that $2,000 an ounce is sort of the right number. We believe that ultimately the Fed will be forced to do quantitative easing. If it happens in September, as our economists expect, we will get a rally sooner in Gold. If it happens after the election (in November), we will get the rally a little bit later; probably we will touch $2,000 an ounce sometime next year.”

China’s stimulus policy seems to be gaining ground as its senior economists are forecasting growth of 7.5 percent in the second quarter. While this number corresponds to similar numbers from a poll by Reuters, the actual data is due tomorrow. “The economy is likely to stabilize and even recover modestly in the second half as such policy measures show results,” said Yu Bin, director of macro economic research department of the Development Research Center (DRC). “Growth in the first half was close to 8 percent,” he said

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

• Gold, $1,564.70, Down $12.50.
• Silver, $27.14, Up $0.04.
• Platinum, $1,416.10, Down $15.50.
• Palladium, $575.50, Down $8.40.

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