Mid-Day Gold & Silver Market Report – 10/31/2013

Ted Prince

10/31/2013 12:23:00 PM

QE REDUCTION CONCERNS CAUSE DROP IN PRECIOUS METALS

Concerns that a reduction in the current scale of quantitative easing (QE) may come sooner than later have pulled Precious Metals prices down today as the U.S. dollar strengthened versus a basket of other currencies.  Some market analysts believe a potential taper of the Fed’s stimulus measures could be announced as early as December instead of the mid-2014 projections that have been forecast in recent weeks.  However, most analysts are still anticipating a second quarter 2014 taper announcement.  “The question remains how much of this extended [quantitative easing] is Gold pricing already?” Standard Bank’s Walter de Wet said. “Given that the consensus view is for tapering to start later in 2014, we believe that Gold is already reflecting this more accommodative policy stance to a large degree.”  Though overall sentiment among electronically traded Gold and Silver has turned bearish since the beginning of the year, physical demand for Precious Metals remains strong as the demand for Gold American Eagles is close to surpassing the all-time record and sales for Silver American Eagle coins have already surpassed last year’s figures by over five million ounces.  “Despite the lack of price movement over the past few months, Gold and Silver American Eagle [coin] demand has been steady. Investors can see a dark and stormy cloud on the horizon and preparing their portfolios accordingly,” one bullion expert said. “The government shutdown and the debt-ceiling debacle have really [opened] investors’ eyes.”

As Gold and Silver are trading sharply lower today, U.S. stocks are hovering at even levels as investors and traders continue to analyze corporate earnings data and the next move for QE.  “The Fed was a little bit more hawkish than people expected, not a lot, but incrementally more hawkish,” Andres Garcia-Amaya, global market strategist at JPMorgan Chase & Co.’s mutual funds unit, said. “Once they do start tapering, the market will start trading more on fundamentals, and fundamentals look fairly resilient.”  Time will tell if equities markets can maintain their strong momentum when there is a lack of government liquidity to lean on after the Federal Reserve reduces or removes its monetary easing program. 

At 1:22 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,325.60, Down $25.70.
• Silver, $21.96, Down $1.07.
• Platinum, $1,450.60, Down $30.30.
• Palladium, $737.50, Down $13.10.

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