Mid-Day Gold & Silver Report, 9/5/2012

Nicholas Wilsey

9/5/2012 12:10:00 PM

GOLD WAITS FOR NEWS, MORE REASONS FOR EASING  

The Gold price has stayed even for most of today. After a boost last week from the talk of monetary easing by the United States Federal Reserve, this week is no different. The pause in the market is due to the impending European Central Bank meetings and the release of important economic data in America. “Gold price behavior has been strongly correlated to monetary policy expectations this year. It is possible that the Gold advance could halt temporarily ahead of a European Central Bank meeting and monthly U.S. employment data later this week,” HSBC analysts James Steel and Howard Wen wrote.

The European markets have risen today on hopes that the ECB will announce a plan to curb widespread debt in the region. Many economists in the area believe there will be a large bond buying plan to offset short term debt. One media report went as far to say the ECB will spend “unlimited” amounts to do so, and that caused quite a stir. “I think the market saw the word ‘unlimited’ and jumped before realizing that the ECB would not expand its balance sheet as it would sterilize all its purchases, and thus this was not the kind of aggressive monetary expansion that FX traders were looking for,” said Boris Schlossberg, managing director of FX Strategy at BK Asset Management in New York.

American economic news has been controlled by talk of a third round of monetary easing. Based on reports this week, that talk may turn to action. On Friday, the monthly jobs report is scheduled to be released, and the outlook is not positive. Even though there are more jobs being added to the workforce, it is not enough to lower the unemployment percentage overall. Population growth is negating any added jobs, which adds more reasoning for economic stimulus.

At 1:04 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,694.40, Down $0.10.
• Silver, $32.30, Down $0.12.
• Platinum, $1,576.50, Up $8.00.
• Palladium, $646.80, Up $5.30.

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