Mid-Day Gold & Silver Market Report, 8/14/2012

Brandi Brundidge

8/14/2012 12:04:00 PM

GERMAN ECONOMY SOFTENS; DOLLAR’S GAIN PRESSURES GOLD  

A positive retail sales report pushed the Gold price lower to start the day. The report from sales data in the United States shows a rise in consumer retail sales for the first time in four months. Most experts said that could boost overall growth in the third quarter of the year and reduce the chance of another round of monetary easing by the Federal Reserve. Saxo Bank Vice President Ole Hansen said, “Whether the U.S. retail numbers diminish the chance of QE3 could be the short term focus now and has the potential to create a bit of headwind.”

As expected, the Gross Domestic Product in the European Union fell in the first quarter of the year. The fall was by 0.2 percent, which could have been higher if it weren’t for the growth in Germany. Germany has been one positive in a long line of negatives in the region. However, the German economy is being affected by the economic struggles of the area. “The German economy has been softening throughout the second quarter,” said Evelyn Herrmann, an economist at BNP Paribas in London. Surveys “signal that more softening in growth is to come in the third quarter, as the resilience of the German economy to eurozone stress is waning.”

In the United States, the dollar is gaining value, which could signal the economic recovery is moving in the right direction. The rise in retail sales and core producer price index, and the negative European reports, the American dollar has moved up compared to other global currencies. The news also reduces pressure on the Federal Reserve to take action. “There is no question that better data reduces the pressure on the Fed to ease, but the central bank’s decision on QE3 never hinged exclusively on the level of inflation or spending,” said Kathy Lien, managing director of FX strategy for BK Asset Management.

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

• Gold, $1,603.90, Down $7.20.
• Silver, $27.88, Up $0.01.
• Platinum, $1,398.30, Up $4.50.
• Palladium, $580.40, Up $4.20.

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