Morning Gold & Silver Market Report – 11/29/2011

Ryan Schwimmer

11/29/2011 8:03:00 AM

EUROPE IS BAD, BUT SO IS U.S.; ANALYSTS STILL LOVE GOLD

Gold prices have risen after an overnight dip, and stock futures have pulled back slightly from early gains.  The stock market is rising mainly based on hopes that European leaders will be able to solve the debt problem in the region.  After a bond sale, Italy’s borrowing costs rose to nearly 8%, far beyond the level most economists consider unsustainable.  European markets and the euro slipped earlier on a report that France would be downgraded from Standard & Poor’s AAA credit rating.  Yet, with this news from Italy and France, U.S. stock futures are gaining based on optimism out of the euro zone.

The last thing the U.S. can do is look down on the euro zone for the continually spreading crisis.  The Associated Press explains that the European debt crisis is echoed in the U.S. by American leaders’ inability to conquer its own debt crisis.  Nariman Behravesh, chief economist with IHS Global, said, “[The fact is] that politicians in both areas have taken what is an inherently manageable problem and turned it into a crisis by their actions or lack of actions.”  He continued, “The worry is that Europe will have what’s referred to as a ‘Lehman moment.’  That would be a problem for the U.S.” because of how interconnected global finances are.

Gold continues to shine in analysts’ eyes.  Commerzbank analyst Daniel Briesemann said, “If you have a look further out for the next six, or even 12, months, we think gold is very well supported around its current levels and even more buyers should find gold attractive at these levels.”  Jeremy Friesen of Societe Generale said, “We remain bullish on gold, because we think the solutions are going to need more aggressive monetary policy, which will be positive for gold. … Into 2012 we should see aggressive monetary policy being reflected in prices of gold.”

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,710.90 – Down $1.60.
• Silver - $31.87 – Down $0.36.
• Platinum - $1,540.10 – Down $0.40.
• Palladium - $582.30 – Up $0.80.