by Ryan Schwimmer December 6, 2011
OPTIMISM ABOUNDS, BUT SO DOES DOMINO EFFECT
Precious metals prices were slipping this morning due to worries over the European debt crisis. Gold, specifically, is still widely regarded as a safe-haven asset, though recently it has moved in line with other assets (such as stocks) as investors use the metal as an insurance policy. When investors suffer losses in the stock market, they sell some of their gold position to make up for those losses. Today, however, gold’s losses have been limited by a rebound in the euro.
U.S. stock futures are pointing to a positive open today, as optimism spreads that eurozone leaders will come up with a concrete plan to shore up the debt crisis. Some investors believe that Standard & Poor’s (S& P) downgrade warning to 15 European countries yesterday will help that process along. Rick Meckler, president of LibertyView Capital Management, said, “There’s an idea the S& P warning is likely to push the EU to work harder at solving its debt crisis. The warning may have the impact of pushing forward the solution without having to be an actual problem to the market.”
Author Satyajit Das wrote a commentary for Marketwatch in which he explained why “we’re all part of the eurozone now.” Expounding upon the interconnectedness of the global economy, he wrote, “What happens in Europe will not stay in Europe. The shock will be rapidly transmitted through trade, investment and the financial system to the rest of the world. … It may truncate the nascent U.S. economic recovery.” Das cited some numbers, as well. “If the International Monetary Fund gets involved, Americans will bear around 16% of the bill for any European bailout.” China’s exposure is large, but Das explained why the U.S. and Europe go hand-in-hand. “The U.S. and Europe account for around 40% of world GDP and 25% of its trade. They also make up around 60% of direct investment flows and 60% of financial assets. Europe and the U.S. are each other’s most important market for goods and services.”
At 8 a.m. (CST), the APMEX precious metals spot prices were:
- Gold – $1,708.00 – Down $24.50.
- Silver - $31.76 – Down $0.60.
SINGAPORE, Dec 6 (Reuters) - Spot gold traded steady
on Tuesday, after posting its biggest daily loss in two weeks in
the previous session on fears of a possible credit rating
downgrade for euro zone nations by Standard & Poor's.
FUNDAMENTALS
* Spot gold was little changed at $1,720.79 an ounce
by 0023 GMT, after a 1.4-percent drop in the previous session.
* U.S. gold dropped 0.6 percent to $1,725.
* Standard & Poor's on Monday warned it may carry out an
unprecedented mass downgrade of euro zone countries if EU
leaders fail to reach an agreement on how to solve the region's
debt crisis in a summit later this week.
* The leaders of France and Germany agreed a master plan
involving treaty change on Monday to impose budget discipline
across the euro zone as a top rating agency piled on pressure
for a rapid solution to the EU debt crisis.
* Cheap valuations offer potential for double-digit returns
on global equities in 2012, with emerging markets likely to do
especially well, the CIO of HSBC's wealth management division
said on Monday, adding he had raised equity exposure at the
expense of gold.
MARKET NEWS
* U.S. stocks gained on Monday, but the day's rally was
dampened by news that Germany and other top-rated European
nations could see their credit ratings cut.
* The euro stayed on the backfoot in Asia on Tuesday after
Standard & Poor's said it was reviewing the credit ratings of
euro zone countries, including top-rated Germany, for a possible
downgrade.
DATA/EVENTS
0330 Australia RBA cash rate Dec 2011
1100 Brazil GDP yy Jul 2011
1245 U.S. ICSC chain stores yy Weekly
1400 Canada BoC rate decision
by Timothy Oakes December 5, 2011
S& P PLACES EUROZONE ON NOTICE RUSSIANS PROTEST ELECTION
The price of Gold fell for the day on technical selling. “We have seen Gold moving along in tandem with equities. However, it is way too early to say that Gold will lose its safe-haven status …,” said David Meger, director of metals trading at Vision Financial Markets. The prices are still correlated to what is going on in Europe. The other shocking piece of information is international concern over potential voter fraud in Russia.
Standard & Poor’s (S& P) has come out with some very harsh wording in its most recent credit rating review for the eurozone. This comes on the heels of German Chancellor Angela Merkel and French President Nicolas Sarkozy pushing for a treaty rewrite to tighten economic cooperation. Fifteen countries are on warning for downgrade, and France and Germany have had their AAA credit rating downgraded. “Systemic stress in the eurozone has risen in recent weeks and reached such a level that a review of all eurozone sovereign ratings is warranted,” S& P said in a statement. Another shocking performance issue to keep in mind is Germany’s bond performance, which has slipped below the U.S. Treasuries for the first time since 2009.
Another alarming development is perceived voter fraud surrounding Russian Prime Minister Vladimir Putin, who has gone on the defensive. Recent elections gave Putin a majority of power within political system, which seemed unlikely to most Russians. “Ballot box stuffing” seems to be the main issue, and a number of Russians demonstrated over Putin’s overwhelming influence on Russian politics. The United States has “serious concerns” over how the election was conducted. Communist Party leader Gennady Zyuganov said, “The country has never seen such a dirty election.” He dismissed the official results as “theft on an especially grand scale.”
At 4:15 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,725.10 – Down $24.20.
- Silver - $32.12 – Down $0.56.
* Investors eye EU summit Fri, ECB rate decision Thurs
* China slows quickly needs policy support
* Coming up: U.S. factory orders, October 1500 GMT
By Susan Thomas
LONDON, Nov 5 (Reuters) - Gold prices dipped on Monday, after posting their sharpest weekly rise in more than a month, in cautious trading ahead of a meeting of European Union leaders to come up with a firm plan to tackle the euro zone debt crisis.
The two-year-old debt crisis has not only pushed a few euro zone nations to the brink of bankruptcy, but also threatened to split the single currency bloc and shake the global economy.
French President Nicholas Sarkozy and German Chancellor Angela Merkel will meet to align their positions on closer fiscal integration of the region, before a European Central Bank meeting and a European Union summit later in the week.
" I think politicians across the board recognise there is a huge issue here that needs sorting out. Whether Europe can deliver is still an open question," said Natixis analyst Nic Brown. " There is likely to be a fair amount of volatility on the political front this week."
Spot gold slipped 0.4 percent to $1,739.29 an ounce by 1212 GMT, after rising nearly 4 percent in the previous week.
U.S. gold fell 0.4 percent to $1,744.
World stocks rose and troubled euro zone bonds recovered as confidence grew that European leaders would make big strides in solving the euro zone's debt crisis at a crucial summit this week.
" Should sentiment improve futher in the market it wouldn't be surprising if gold falls again, but it may also come under pressure if the rest of commodity sector comes under pressure," Commerzbank analyst Eugen Weinberg said.
" It's not performing as expected at the moment, but there is no reason to be worried yet. It's not surprising after the last couple of weeks to see some profit taking."
Gold has diverged somewhat from its traditional status as a safe haven from political and economic volatility in recent weeks, and has tended to move more in line with other commodities, like base metals.
Benchmark three-month copper on the London Metal Exchange was down 0.4 percent at around $7,855 per tonne.
" There is still a lot of risk in Europe, and gold prices are no longer reacting to it they way they used to," Brown said.
" Commodities across the board are trading as an asset class and therefore inversely related to the strength of the dollar."
The dollar fell against a basket of currencies on Monday, as the euro rose on hopes for a positive outcome from the Dec. 9 EU summit. A weaker dollar makes commodities priced in the currency cheaper for holders of other currencies.
" Market hopes of progress on Europe should support gold prices for the next few days ahead of an expected ECB rate cut on Thursday," ANZ said in a note.
The European Central Bank (ECB) is expected to cut its main interest rate for the second month running, a move that would take it back to a record low of 1.0 percent or lower if the bank decides a 50 basis point cut is needed.
China also seems to be in need of monetary policy support.
After publishing data showing its vast manufacturing sector shrank in November, an HSBC purchasing managers' index showed the world's second-largest economy slowing quickly.
Monetary policy easing raises the inflation outlook and benefits gold, seen as a good inflation hedge.
FUNDAMENTALS
On the fundamental side, the news flow remained supportive for gold.
After last week's coordinated central bank intervention, physically backed exchange-traded funds registered new inflows again, Credit Suisse said in a note.
The official sector also continued to buy.
South Korea's central bank said on Friday it bought gold in November for the second time this year to diversify its foreign reserves, joining its counterparts in other countries in seeking protection against financial instability and inflation.
Palladium outperformed the precious metals complex, rising 0.5 percent to $645.22, lifted by data last week showing U.S. auto sales rose 14 percent in November, the fastest rate in almost two years.
Palladium is used in auto catalysts.
Platinum dipped 0.5 percent to $1,539.99 and silver rose 0.03 percent to $32.57. (Reporting by Susan Thomas Editing by William Hardy)
SINGAPORE, Dec 5 (Reuters) - Gold prices edged higher
on Monday, after posting their sharpest weekly rise in more than
a month, as investors expect euro zone leaders to craft a
concrete solution to the debt crisis at a key European Union
summit later in the week.
FUNDAMENTALS
* Spot gold edged up 0.3 percent to $1,751.59 an
ounce by 0025 GMT, after rising nearly 4 percent in the previous
week.
* U.S. gold inched up 0.3 percent to $1,755.90.
* Investors expect European politicians to come up with a
definitive resolution of the two-year-old debt crisis on Friday.
The European Central Bank is scheduled to hold its last policy
meeting of the year on Thursday, and is likely to cut interest
rates and announce new long-term liquidity tenders.
* Italian Prime Minister Mario Monti unveiled a
30-billion-euro ($40.3 billion) package of austerity measures on
Sunday, raising taxes and increasing the pension age in a drive
to shore up Italy's strained finances and stave off a crisis
that threatens to overwhelm the euro zone.
* As the euro zone and global markets face a crucial week,
managed money cut its net long positions in U.S. gold futures
and options for a second consecutive week.
* Spot palladium rose nearly half a percent to
$645.25 an ounce, extending a 14-percent rise from the previous
week -- its biggest one-week gain in more than three years.
MARKET NEWS
* Dow and S& P index futures opened higher on Sunday,
suggesting the previous week's rally -- the biggest in almost
three years -- could be extended in the coming week.
* The euro got off to a choppy start on Monday in what is
likely to be a recurring theme this week as hopes for a
resolution to the euro zone debt crisis wax and wane in the
leadup to yet another European Union summit.
by Peter LaTona December 2, 2011
GOLD PRICES HOLD AS STOCKS GIVE UP EARLY GAINS
Gold prices maintained their morning gains, but the same was not true for the stock market. Stocks gained as much as 150 points, but gave back all of the gain by day’s end. It might be that Friday’s jobs report was not as positive as first viewed. The overall unemployment rate fell to 8.6%, but that might be explained by the number of people who have given up looking for jobs and are therefore no longer counted in the numbers. The number of discouraged workers rose by 129,000.
Chinese regulators implemented policy changes over the past year to encourage Chinese citizens to buy more Gold. China is currently behind only India in world Gold consumption. The new regulations obviously are working as Gold purchases in China via Hong Kong for the month of September jumped sixfold! The Chinese mainland imported a record 56.9 tons via Hong Kong in September. In the third quarter, China imported about 140 tons, which was more than the 120 tons imported in all of 2010. U.S. investors often forget that India and China have more to do with Gold prices than what happens here in the U.S.
Next Friday is the day European leaders will meet in Brussels, Belgium, and the world will be watching to see if they can come up with a viable plan to fix the eurozone’s massive debt problems. Stay tuned!
At 4 p.m. (CST), the APMEX precious metals spot prices were:
- Gold price -$1,747.10 – Up $9.30.
- Silver price - $32.68 – Down $0.07.
* Market awaits Europe meeting next week
* Spot palladium on course for best week in 3
* years
By Maytaal Angel
LONDON, Dec 2 (Reuters) - Spot gold edged up on Friday as investors bought the metal along with other risk assets, encouraged by promising jobs data from the United States and signs that
euro zone policymakers are working hard to resolve the debt crisis.
The U.S. unemployment rate fell to a 2-1/2 year low of 8.6 percent in November and companies stepped up hiring, data released earlier showed, adding to previous evidence that the world's largest economy is gaining momentum.
Also boosting risk appetite, there is widespread investor expectation that a European summit next week could finally yield a concrete solution to the euro zone debt crisis, with
France and Germany on Monday to outline joint proposals for the meeting.
Meanwhile the new head of the ECB has said he stands ready to act more aggressively to fight Europe's debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.
" Gold use to be working as a fear indicator but at the moment it's trading more or less like a risk asset. Risk is on because of the better (U.S.) employment data and the expectations for the E.U. summit are very high," said Commerzbank analyst Eugen Weinberg.
Spot gold edged up 0.24 percent to $1,747.94 an ounce by 1451 GMT from 1,743.74 in late trades on Thursday. It is on course to rise more than 4 percent from a week earlier, its biggest weekly gain in a month.
U.S. gold rose 0.66 percent to $1,750.80 an ounce.
Gold rallied earlier in the week after the world's major central banks joined forces to boost liquidity, but the momentum quickly faded as investors realised that the move would not solve Europe's debt problems.
In this regard, next week's European summit, dubbed the last chance to save the euro by the popular press, will be key for gold, which has lost ground as a safe haven asset of choice in the current crisis.
" Liquidity is the focus of the market. Gold's appeal as a safe haven may return only when liquidity improves and market sentiment warms up," said Hou Xinqiang, an analyst at Jinrui Futures.
Technical analysis suggested spot gold could drop to $1,722 during the day, said Reuters market analyst Wang Tao.
Supporting sentiment in gold, South Korea's central bank bought 15 tonnes in November, after purchases of 25 tonnes in June and July, as central banks around the world, especially in emerging economies, have aggressively bought bullion over the past few months.
" It's not a surprise, as gold seems to be the only thing central banks can buy to diversify their reserves as economic problems seem to spread around the world," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers.
Spot palladium rose more than 5 percent to hit a day high of $658 an ounce, its highest since mid November and on course for its biggest weekly gain since November 2008. It was later at $647.25 an ounce from $625.30.
Helping the metal was technical buying brought on by gains sparked Thursday following news that Norilsk Nickel, the world's biggest palladium maker, expects the market to be in a deficit in 2012 due to sharply lower Russian supplies.
Silver was at $33.06 an ounce from $32.72, while platinum was at $1,553.24 an ounce from $1,555.25.
(Reporting by Maytaal Angel Additional reporting by Rujun Shen editing by
Jason Neely)
* Market awaits Europe meeting next week
* Spot palladium on course for biggest weekly gain in 3
years
* Spot gold could fall to $1,722 - technicals
* Coming up: U.S. nonfarm payrolls, November 1330 GMT
By Rujun Shen
SINGAPORE, Dec 2 (Reuters) - Spot gold was steady on
Friday, after the euphoria around a coordinated effort to inject
liquidity by central banks faded, ahead of a U.S. employment
report later today and a key euro zone summit next week.
The U.S. non-farm payrolls data is expected to show a pickup
in hiring in November, which could add to expectations of
stronger growth in the world's largest economy, just as
manufacturing data in the euro zone and much of Asia contracted
in November, pointing to a global slowdown.
News from Europe will continue to dominate sentiment.
Markets rallied earlier in the week after the world's major
central banks joined force to boost liquidity, but the momentum
quickly faded as investors realised that it could not solve
Europe's debt problems.
" The central banks' move reinforced the perception that
liquidity crunch is a big problem," said Hou Xinqiang, an
analyst at Jinrui Futures, adding that gold's property as a safe
haven has been overlooked in recent months and the gloom hanging
over the global economy is likely to suppress gold's sentiment.
" Liquidity is the focus of the market. Gold's appeal as a
safe haven may return only when liquidity improves and market
sentiment warms up."
Spot gold edged down 0.1 percent to $1,742.20 an
ounce by 0709 GMT, but is on course to rise 3.7 percent from a
week earlier, its biggest weekly gain in a month.
U.S. gold inched up 0.4 percent to $1,746.30.
Technical analysis suggested spot gold could drop to $1,722
during the day, said Reuters market analyst Wang Tao.
Investors will closely watch the European Council summit
next week. The new head of the European Central Bank signalled
that it stood ready to act more aggressively to fight the debt
crisis if policymakers agree on much tighter budget controls in
the euro zone.
Supporting the sentiment in gold, South Korea's central bank
bought 15 tonnes of gold in November, following purchases of 25
tonnes in June and July, as central banks around the world,
especially in emerging economies, have aggressively bought
bullion over the past few months.
" It's not a surprise, as gold seems to be the only thing
central banks can buy to diversify their reserves as economic
problems seem to spread around the world," said Ronald Leung, a
physical dealer at Lee Cheong Gold Dealers.
Norilsk Nickel expects autocatalyst metal
palladium to be in a deficit in 2012 due to sharply lower
Russian supplies, the world's biggest palladium producer's
marketing chief said on Thursday.
Spot palladium gained 1.4 percent to $634.22, on
course for its biggest weekly gain since November 2008 with a
12.8 percent rise.
by Peter LaTona December 2, 2011
UNEMPLOYMENT RATE DROPS BELOW 9%
This morning’s jobs report shows 120,000 jobs were created in November. Although this falls just short of the anticipated number of 122,000, the jobless rate fell to 8.6%. Although part of this drop is attributed to those who have given up looking for jobs, it is the first time in several years the unemployment rate has been below 9%.
Markets rallied overnight on the expectation of a positive jobs report and new rumors that European leaders may be close to coming up with a credible plan to fight their debt crisis. German Chancellor Angela Merkel was quick to point out that this is a marathon crisis that will take years to fix. “The government has made it clear that the European debt crisis cannot be solved in one fell swoop overnight,” Merkel told parliament. “There is no miracle solution. Resolving the sovereign debt crisis is a process, and this process will take years.” European leaders meet in Brussels, Belgium, next week in what is considered to be a make-it-or-break-it event.
On this day 10 years ago, Enron filed for bankruptcy. Joe Berardino, former chief executive of Arthur Andersen (the accounting firm that eventually dissolved as a result of its work with Enron), sees a great deal of similarities between the current European debt crisis and Enron. Leveraging is where he sees the common ground. “What leverage does is it puts all your trades on octane, and it's great until it's not great. And I think the real lasting issue there is also the need for liquidity, which we lived through three years ago and we're living through now,” Berardino said. He added, “I think what complicates the matter is that we’ve gone more toward a service economy and years ago went off the gold standard. … (Now) you’re finding you’re trading pieces of paper, and when you’re trading pieces of paper, the underlying issue is trust in your counterparty and trust in the system and transparency in the system. And so these two issues, I think, get undermined.”
At 8 a.m. (CST), the APMEX precious metals spot prices were:
- Gold price - $1,754.10 – Up $16.30.
- Silver price - $33.21 – Up $0.46.
by Brandi Brundidge December 1, 2011
WILL FUTURE GENERATIONS KNOW EU?
Precious metals prices held strong for the day with the prospect of a growing monetary disaster. With global central banks coming together Wednesday to prevent a more severe financial crisis, investors might be considering an exit from riskier investments. Bank of Montreal strategy adviser Don Coxe said that instead of equities tied to the economy, investors should consider buying Gold-mining stocks or the metal itself. Coxe said Gold will surpass $2,000 an ounce in the event of “a full-blown crash of the banking system in Europe.”
Today, French President Nicolas Sarkozy spoke regarding the growing debt crisis in Europe. In his speech Sarkozy said, “We should overhaul Europe urgently. If Europe doesn’t change quickly enough, global history will be written without Europe.” Sarkozy’s speech was scheduled after European Central Bank President Mario Draghi implied additional financial assistance may be in Europe’s near future. However, Germany continues to balk at the French changes being requested. German Economy Minister Phillip Roesler said in an interview Thursday that Germany is united in rejecting euro bonds to fix the debt crisis. He said, “We are not prepared to buy into changes to the (European Union) treaty in exchange for rules that other European countries want, for example euro bonds.” It seems the German voters have spoken, and they no longer have interest in the role of Europe’s paymaster. Germany and France are supposed to be the top two economies in charge of eurozone policy.
China is reportedly in financial trouble, with China’s central bank recently cutting the reserve requirement ratio for its commercial lenders. That had not happened in almost three years. The purpose of cutting the ratio is to reduce the reserve amounts the banks are required to keep to free up funds to lend to small companies. Analysts predict the amount of currency this action released into the banking system is close to $54.8 billion to $62.7 billion USD. Stephen Green, China economist at Standard Chartered Bank in Hong Kong, said, “This is a big move — this is easing it's a clear signal that China is on a loosening mode. The next move will be another RRR cut in January.”
At 4:08 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,747.10 – Down $1.20.
- Silver – $32.81 – Up $0.02.
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