Morning Gold & Silver Market Report – 5/11/2011

Timothy Oakes

5/11/2011 8:03:00 AM

U.S., CHINA SHOW SIGNS OF MIDDLE GROUND

After two days of meetings, and the release of pertinent data, U.S. trade deficit expanded, as exports increased to a new record, with imports rising, primarily, on oil costs. The deficit between imports and exports suggests a stronger U.S. and global demand for goods. These are levels last seen before the crisis in 2008. The Chinese also saw an ease in their trade deficit, which reduces the need to tighten their monetary policy. Policymakers in China are actually more concerned with an overly rapid slowdown due to money tightening. "The data suggests that previous measures to get a grip on lending and growth have had an impact," said George Worthington, chief Asia economist, IFR Markets, a unit of Thomson Reuters, in Sydney.

In other global news, the austerity measures Greek government officials have put in place have resulted in large-scale strikes. "People feel they can't make ends meet and at the same time believe that these policies are not effective. This is an explosive mix," said Costas Panagopoulos at ALCO pollsters. However, at the end of the day, support for Greece and other debt strapped countries is a more desirable solution than full on restructuring. A full on restructure would hit European banks very hard.

The appeal of gold is still there. "Gold is generally benefiting from the return of confidence from investors," said Darren Heathcote, head of trading at Investec Australia. "They are very happy buying on the dip, as we see the same old problems hanging around."

At 8 AM (CT) the APMEX precious metals prices were:

• Gold price – $1516.40 (down $2.00)
• Silver price – $38.14 (down $0.41)
• Platinum price – $1798.00 (down $3.90)
• Palladium price - $727.40 (down $7.30)