Closing Gold & Silver Market Report – 4/1/2013

Brandi Brundidge

4/1/2013 4:24:00 PM

GOLD SEARCHES FOR SUPPORT; ANALYSTS PROVE FED’S QE IS DEVALUING DOLLAR

After the holiday weekend, Gold continues to trade in a confined range after the market received mixed U.S. economic data today. Investors are moving on to the next round of reports such as Wednesday’s private payroll jobs report and the Bureau of Labor Statistic’s nonfarm payrolls on Friday. “I think if we see any kind of tick up -- if we go 7.8 percent [unemployment rate] or even jump up two handles to 7.9 percent; if you see that jobs number come out in the 150 [thousand added to nonfarm payrolls] something real low like a big miss . . . Gold prices will probably break out to the upside,” Phil Streible, senior commodities broker at RJO Futures, said in an interview.

In the recently issued San Francisco Federal Reserve Bank’s Economic Letter, researchers confirmed what many investors believe in regards to quantitative easing lowering the value of the U.S. dollar. Since 2008, the Federal Reserve has embarked on three quantitative easing programs to promote growth and stability for the U.S. economy. Its most recent bond buying program focuses on mortgage-backed securities and Treasuries with a purchase amount of $85 billion per month. “We find that a quantitative easing surprise equivalent to a 1 percentage-point decrease in federal funds rate future leads to a 0.5 percentage-point depreciation in the dollar. The size of this effect is comparable with the 0.7 percentage point depreciation following surprise movements in the federal funds rate before the financial crisis,” wrote Reuven Glick, group vice president of research at the San Francisco Fed, and Sylvain Leduc, a vice president in the San Francisco Fed’s research department.

At 5:15 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,600.70, Up $4.00.
• Silver, $28.05, Down $0.35.
• Platinum, $1,596.80, Up $23.70.
• Palladium, $780.00, Up $12.80.

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