Mid-Day Gold & Silver Market Report, 8/8/2012

Brandi Brundidge

8/8/2012 12:15:00 PM

GOLD AWAITS DIRECTION; MORE HARM THAN GOOD IN EURO RECOVERY?   

At the midpoint of the week, Gold has had little of the direction needed for a significant price move. The main points of interest have been the lack of action from the central banks of Europe and the United States. Another factor is a slow start to the festival season in India, which is known for raising Gold demand. India has had weaker demand this year because of its weakened currency and a tax hike on imports. All eyes are firmly planted on policy makers, waiting for a solid action plan to set the course. “There is a lack of momentum in the market,” a Hong Kong based dealer said. “Prices are unlikely to break above $1,620, but falling below $1,570 is also difficult.”

The European Central Bank (ECB) has taken a considerable amount of time coming up with a plan to help struggling countries in the region. With action being taken to lower the debt of countries such as Spain and Italy, some are saying those actions will do more harm than good. “In a way what the ECB has done is making the situation worse,” said Nicola Marinelli, who oversees $160 million at Glendevon King Asset Management in London. “Focusing on the short end is very dangerous for a country, because it means that every year after this they will have to roll over a much larger percentage of their debt.”

The United States Labor Department released a report on productivity, and it was better than expected. The numbers were not overwhelming; nevertheless, they were an improvement. One point that has been mentioned is that without better employment numbers, the productivity can only go so high. “The pace of productivity growth is relatively soft at the moment. It’s hard to add production on a faster pace without adding more workers,” said Jeremy Lawson, an economist at BNP Paribas in New York.

At 1:08 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,614.60, Up $3.80.
• Silver, $28.16, Down $0.04.
• Platinum, $1,411.00, Down $0.40.
• Palladium, $588.00, Down $6.40.

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