Mid-Day Gold & Silver Report, 7/23/2012

Brandi Brundidge

7/23/2012 12:03:00 PM

EUROPEAN REPORTS HAMPER GOLD; JOBS SECTOR STAGNATION FUELS CALLS FOR QE  

The Gold price started the week lower because of bleak financial news from Europe. Spain and Greece are the two main topics in the news today. The financial bailout in Spain may be more costly than originally anticipated, and the bailout in Greece is being threatened by speculation of Greek loan defaults. “If you have two countries in major trouble at the same time, that of course is somewhat anti-inflationary, because that means the economic recovery is going to take a little bit longer than people expect, even with stimulus,” said George Gero, Precious Metals strategist at RBC Wealth Management.

As the news of a faltering economic recovery plan in Europe continues to dominate the headlines, the talk of countries exiting the European Union is again a hot topic. One main issue is a lack of an exit clause for member countries of the EU. “The common refrain that no country can ever be allowed to leave the EU is altering the incentives for nations to take the actions necessary to maintain membership,” said James Bullard, a United States Federal Reserve policymaker, during a speech in London.

In the United States, economic progress has been very slow. One of the main indicators is the unemployment rate. While the unemployment rate has not been going up this year, it also has not shown signs of improvement, either. Because of such inactivity, many economists are saying another round of monetary easing is needed to stimulate positive growth. “The main benefit from my point of view is it will get the markets to stop focusing on the terminal date (when a program of purchases ends) and also focusing on, ‘Oh, are they going to do QE3?’” said John Williams, president of the Federal Reserve Bank of San Francisco. “Instead, markets would adjust their expectation of Fed purchases as economic conditions changed.”

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

• Gold, $1,580.10, Down $4.20.
• Silver, $27.18, Down $0.21.
• Platinum, $1,399.40, Down $15.10.
• Palladium, $571.00, Down $6.10.

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