Mid-Day Gold & Silver Report, 7/30/2012

Brandi Brundidge

7/30/2012 12:07:00 PM

GOLD WAITS ON CENTRAL BANK MEETINGS  

The Gold price has started the week in a holding pattern. After last week’s significant climb of more than 2 percent, the yellow metal is waiting for a signal from the central banks in Europe and the United States this week to determine a course of action. Most expect European Central Bank President Mario Draghi to deliver on a promise he made last week of doing “whatever it takes” to save the euro. If he doesn’t, some believe it could have serious repercussions. “The market will be very disappointed if Draghi doesn’t deliver,” Commerzbank analyst Daniel Briesemann said. “The expectations for the upcoming ECB meeting are very high, and he must say something really significant. If he fails to do so, we will probably see lower commodity prices across the board, due to a stronger U.S. dollar.”

In the United States, the theme of the Federal Reserve discussions continues to be a third round of quantitative easing to help further stimulate the economy. In Europe, there is now talk of a round of easing for that region. The European Central Bank is to announce a decision Thursday regarding its future plan of action. While it is not believed there will be any drastic measures such as monetary easing happening this week, it is expected some action will be taken. That may come in the form of restarting the controversial bond purchasing program or more action on interest rates. Not all members of the European Union agree with such measures. The president of one of Germany’s largest banks is one of them. “The mechanism of bond purchases is problematic because it sets the wrong incentives,” a spokesman for Bundesbank President Jens Weidmann told Reuters.

As the Precious Metals markets await cues from the central banks, so does the stock market. “You won’t get movement either way; the market just has to catch up with itself,” said Ken Polcari, managing director at ICAP Equities in New York. “That being the case, certainly everyone thinks that Europe is going to come out with this big bazooka, and they also think the Fed will launch, so therefore the market is going to stay up here.”

At 1:03 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,619.70, Down $0.60.
• Silver, $28.10, Up $0.51.
• Platinum, $1,411.60, Up $3.10.
• Palladium, $589.40, Up $16.50.

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