Morning Gold & Silver Market Report – 10/17/2012

Brandi Brundidge

10/17/2012 8:37:00 AM

PIMCO ADDS TO ITS GOLD POSITION; SPAIN EXPECTED TO ASK FOR BAILOUT

Gold is slightly up this morning as anticipation builds before this week’s European Union leaders’ meeting to discuss Spain’s financial crisis. Germany will assist Spain if they ask for a bailout, and that willingness to help is supporting the euro. “Gold and the precious complex have been held afloat overnight and this morning by a stronger euro,” Edel Tully, an analyst at UBS AG in London, wrote today in a report. “Gold's ability to stay buoyed today will be dependent on foreign exchange moves and risk appetite.”

Pimco’s Bill Gross, who oversees the management of more than $1.8 trillion, is moving his known investment focus from bond purchasing to dividend-paying stocks, which he believes may be a more favorable long term asset. Most recently, Pimco purchased additional Gold as a hedge against inflation, which other investors have also done, as the market watches the Federal Reserve freely print money to strengthen the United States economy. 

Spain, the eurozone's fourth-largest country, is expected to request a full bailout. As of now, Spain has asked for support of its indebted banks, but if they call for a bailout the European Central Bank would step in to purchase its bonds. This was approved by the market earlier this year, but investors remain leery on the condition of Europe’s financial situation. “Progress towards banking and fiscal union remains predictably slow,” Capital Economics warned. “Against this background, the crisis looks likely to flare back up over the coming months, further darkening the economic outlook and maintaining a high risk of at least some form of fragmentation of the currency union.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1746.00, Up $0.20.
• Silver, $32.96, Down $0.02.
• Platinum, $1656.50, Up $14.30.
• Palladium, $645.00, Up $5.00.

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