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Interesting Times are the Best Times to Own Tangible Gold

December 10, 2012 - In early morning trading Monday safe-haven demand, bargain hunting, and short covering brought U.S. gold futures for February delivery up $8.40 to $1,713.80 per troy ounce. The spot price of gold quoted up $8.10 to $1,713.00 per troy ounce as Comex silver for March delivery gained $0.259 to $33.39 per troy ounce.

Last week saw gold and silver down by 0.53 percent and 0.93 percent respectively. There has been intense pressure on precious metals from a strong U.S. dollar, though the pressure broke last week with debt agreement for Greece that brought the euro off a two-month low against the dollar.

Friday’s U.S. non-farm payrolls data showed higher than expected growth with 146,000 jobs being added and the unemployment rate in the U.S. dropping to 7.7 percent. The data has been questioned by many mainstream news sources on the basis that Hurricane Sandy as well as the Thanksgiving holiday may have skewed data results.

Markets look forward to the Federal Reserve’s FOMC meeting set to occur tomorrow and Wednesday with most expecting the central bank to declare continued bond purchases of $45 billion per month and analysts believing this shift is not yet priced into gold and would lead to higher prices in the short term.

The Operation Twist bond-buying program is set to expire and it is likely the FOMC meeting will bring about a continuation of the program or the announcement of a new program. Many market analysts believe an announcement of an outright QE4 is possible. Such news would be bullish for the raw commodities, including gold and silver.

Continued uncertainty out of the Eurozone also continues to be supportive of safe-haven interest in precious metals. Despite the agreement on a debt deal for Greece early last week, Germany’s central bank cautioned on Friday that the European Union’s strongest economy may slide into a recession. The news hit markets strongly as Germany until this point has been a bulwark against recession in Europe.

Italian Prime Minister Mario Monti announced his intention to resign early from his post, sparking a drop in Italian 10 year bonds with yields rising from 4.448 percent to 4.89 percent.

Safe haven demand is a main driver of gold and silver at this time with bargain buying on the dips continuing to be strong. The political uncertainty in Europe and the United States continues to generate demand, but the majority of the buying at this juncture is occurring at dips and low price-points, considered bargain buying.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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