Mid-Day Gold & Silver Market Report – 09/18/2012

John Foster

9/18/2012 12:13:00 PM

QUESTIONS OF QE3’S EFFECTIVENESS; S. AFRICA STRIKE APPEARS OVER

Gold prices moved off earlier session lows as the Federal Reserve has stated it’s “running flat out” of plans to stimulate the lagging U.S. economy. Excitement over last week’s announcement of a newest round of monetary easing (QE3) has been tempered by concerns over it’s effectiveness. “Judging by the broader commodity market, the QE3 euphoria is over for now,” said Andrey Kryuchenkov, an analyst at VTB Capital. “Yet bullion is still bullish in the long run, given debasing of major fiat currencies, liquidity boosts, etc. Inflation concerns will resurface.” The Fed’s decision to ease monetary policy could benefit Gold by keeping interest rates low and increasing liquidity, which could drive up concerns of inflation. “The policy says that, even if we reach economic sustainability, central banks will keep interest rates low and monetary policy loose,” said LGT Capital Management analyst Bayram Dincer. “The forward-looking guidance of central banks is very favorable for real assets, because in that kind of scenario you have inflation-hedge and diversification benefits provided mainly by Gold.”

Platinum and Palladium are off strongly as the sometimes violent strikes at Lonmin’s Marikana mine in South Africa appear to have come to an end. The striking workers have accepted a new pay raise offer and have committed to return to work on Thursday.  The unrest in the area had slowed or stopped production for nearly six weeks.

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

• Gold, $1768.30, Down $1.30.
• Silver, $34.61, Up $0.24.
• Platinum, $1,637.20, Down $36.40.
• Palladium, $666.70, Down $22.40.

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