Eurozone index indicates upcoming recession

American stock futures and Precious Metals are down this morning, as news out of Europe disappointed investors. The eurozone purchasing managers’ index declined in July, further indicating a recession is likely soon in the region. Rob Dobson, senior economist at Markit, said, “The final August PMI came in only slightly below its earlier flash estimate, leaving the eurozone economy on course to fall back into technical recession in the third quarter.” Dobson said “there is little prospect of a sustained improvement in economic conditions over the near term.”

Eurozone policymakers are set to meet tomorrow, and many investors are expecting a new round of monetary easing in the form of bond purchases. One interesting possible outcome of the eurozone meetings is that if any disappointing news comes out and the markets take a hit, the United States Federal Reserve may be more willing to enact its own quantitative easing measures. Stephen Davies, chief executive at Javelin Wealth Management, added another wrinkle to the story. He said, “We are entering into a strange couple of months because the ability of the Fed to take up much of the slack seems to be quite limited on the basis that they will be quite reluctant to make any major moves ahead of the election, on fear of appearing too partisan.”

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

  • Gold, $1,694.40, Down $0.30.
  • Silver, $32.33, Down $0.08.
  • Platinum, $1,567.00, Down $1.50.
  • Palladium, $643.00, Up $1.50.

APMEX’s Account Managers now have extended hours Mondays through Fridays and are here to serve you until 8 p.m. (EDT)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

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Weekly Gold and Silver Market Recap for May 25, 2012

by John Foster. Email John.

Golden Range?:

Concerns out of the Euro zone continued to pull down the euro and strengthen the American dollar this week, thus pulling down prices. Gold in particular has remained relatively fluid within a certain price range of $1,530 to $1,590. However a key price indicator in the short term continues to be $1,600 an ounce. However, euro pressure continues to be in the driver’s seat for prices. An unidentified international dealer said, “If we break above $1,600 and even go higher to confirm the bull trend, we will see more buying.”  Gold’s price drop has been well documented during the past few weeks. Many factors have led to the shift in price. However, in the view of many investors, this is an opportunity, based on a closer look at the numbers. CNBC contributor Dennis Gartman said, “The public is massively bearish, and that tells me it’s time to be bullish.” He added, “Most people don’t think Gold and stocks can go higher together, but I expect to see them trade dramatically higher over the course of the next several months. The trend is now higher.”  Prices of Precious Metals were boosted by news of purchases from the biggest of spenders. Central banks in Turkey, Ukraine, Mexico, and Kazakhstan increased their Gold holdings in April, according to the International Monetary Fund. Commerzbank AG said, “We regard the central banks as a stabilizing element on the Gold market and anticipate increasing buying of Gold.” Lachlan Shaw of Commonwealth Bank of Australia said that early signs of an American recovery, a slowdown in Chinese growth, question marks over United States monetary policy and a sovereign debt crisis brewing in Europe are all keeping the market in a wait and see mode. “Any of these four catalysts can drive prices and investment demand,” he said.

U.S Slow but Steady?:

The United States might experience slower economic growth than previously expected with the end of extended benefits for the unemployed. This might influence some job seekers to accept jobs they otherwise would prefer not to, or give up searching for a job and drop out of the labor force. Andrew Tilton at Goldman Sachs Group Inc. is optimistic about the end of the extended benefits program. He said, “There has been an improvement in the availability of jobs. In a better labor market, people losing their benefits would be more likely to look and to find a job, and less likely to simply drop out.  However, consumer sentiment in the United States rose to its highest point in more than four years in May. Optimism in the air as a healthier economy is beginning to develop. Richard Curtin, head of the University of Michigan’s consumer survey, reflected on how long the consumer sentiment will remain positive. He said, “The most likely prospect is that job growth resumes at a modest pace and that confidence remains largely unchanged until after the November election and decisions about tax policy are made.” Despite the upheaval in Europe, the United States’ economy continues to push forward. There is concern the debt problems in Europe and China could affect American factory data soon, with the Purchasing Managers Index slowing from 56.0 in April to 53.9 this month. Paul Edelstein said, “We are growing at moderate pace of two to two-and-a-quarter percent, but we have some headwinds that are starting to assert themselves, particularly coming from Europe.” Continue reading

Precious metals jostled by currencies

Precious metals have been relatively volatile throughout the day, but ultimately settling higher for the day bringing an end to a downward trend over the last few days. The U.S. dollar was down earlier in the day but rallied through the afternoon. There was also some technical maneuverings ahead of a change in futures contracts. Eurozone fears still continue to fester as an EU summit voiced support for Greece to remain in the eurozone, but not offering anything substantial in terms of a plan to make that happen.

Eurozone citizens, by and large, are still supportive of Greece remaining in the eurozone despite the looming fear that they may be forced to exit. Support for remaining in the eurozone is strongest in Greece and lowest in Germany and Italy. However, support is still well above 50% for Greece to remain in the eurozone. According to John Wright, “Regardless of the turmoil and the debate that’s going on in these crucial countries, it would seem that for the time being, people want to stick with the euro… Maybe it’s an issue of ‘if one goes down, we all go down together’, but nevertheless, given the options, the public in these crucial countries seem to be on side. People aren’t willing to abandon it – not yet.” Meanwhile, the Syriza party continues to build momentum ahead of Greek elections. The Syriza party is anti-austerity and headed by Alexis Tsipras.

Despite the upheaval in Europe the United States’ economy continues to push forward. The debt problems in Europe and China could start impacting American factory data pretty quickly, with the Purchasing Managers Index falling from 56.0 in April to 53.9 this month. Paul Edelstein said, “We are growing at moderate pace of two to two-and-a-quarter percent, but we have some headwinds that are starting to assert themselves, particularly coming from Europe.”

At 5:00 p.m. (EDT) – the APMEX Precious Metals spot prices were:

  • Gold – $1,560.20 – Up $10.30.
  • Silver – $28.36 – Up $0.76.
  • Platinum – $1,421.60 – Up $5.50.
  • Palladium – $588.40 – Down $4.70.
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Weekly Gold & Silver Market Recap for March 23, 2012

In the past few weeks, Gold has been experiencing a positive correlation to Treasury prices, which means Gold likely will follow the trend of U.S. bond prices. According to the Financial Times, an industry source reported in recent weeks that central banks have been buying Gold, with an estimated four metric tons of the metal being bought. The consumer demand seems to have helped boost Gold sales as well. According to Rohit Savant, an analyst with CPM Group in New York, “A lot of it has to do with bargain hunting.” Rohit said lower prices are enticing investors back to Gold.

With India‘s announcement late last week that taxes for Gold purchases will increase, many of that country’s jewelers have been on strike, which lead to a slump on gold demand this week. The jewelers’ fear that the shift to double customs duty on Gold will increase prices and weaken demand. This week, credit rating agency Moody’s announced that starting in April, India’s credit rating will be credit negative for its sovereign debt, based on its, “…dependence on corporate tax revenue and vulnerability to commodity prices and exchange rates.”  Many investors are awaiting European data to see how the eurozone is faring after the Greek bailout deal. Yuichi Ikemizu, head of commodity trading, said, “A lot of people are on the sidelines at the moment. … We saw some bearish signs, but the market seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.” Continue reading