Morning Gold & Silver Market Report – 3/25/2013

Geoffrey Varner

3/25/2013 8:20:00 AM

CYPRUS BAILOUT RALLIES MARKETS, LOWERS GOLD

The stock market is heading for a positive open this morning after eurozone financial leaders secured an 11th hour deal bailing out Cyprus. ICAP in London strategist Chris Clark said, “The market’s reaction to the deal has been positive but hardly amounts to a tidal wave of relief.” Last week, trading was overshadowed by the situation in Cyprus but with a deal now in place the immediate fear of contagion has eased. Failure to reach a deal could have led to a complete collapse of Cyprus’ banking system and the country’s exit from the eurozone.

In a classic example of the inverse relationship Gold has with risk-based assets, Gold dropped to its lowest point in a week after the Cyprus deal was struck. Investors take what they consider to be positive news and unload safe haven investments, like Gold, to move to riskier assets. Some investors had begun to buy Gold as the Cyprus situation ignited fears of another eurozone debt crisis. That seems to have been resolved and according to Peter Fertig, consultant at Quantitative Commodity Research, “Sentiment [for Gold] remains still negative as there is this assessment that improving economic activity and higher equities would make Gold less attractive in coming months.”

At 9:00 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1595.30, Down $13.30.
• Silver, $28.69, Down $0.08.
• Platinum, $1580.10, Down $3.60.
• Palladium, $762.80, Up $2.20.

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