Gold, Silver Higher on Fed Stance, Eurozone Weakness

by Andrew Burger | April 26, 2012 12:42 pm

Gold and silver were showing healthy gains Thursday morning following supportive statements on Wednesday from Fed Chairman Bernanke, further signs of economic weakness in the eurozone and a strong earnings season. Spot gold was up 0.78%, bid at 1,657.10 as of 10:52 a.m., having traded as high as $1,660 and as low as $1,647.80 an ounce, according to Kitco market data[1]. The London afternoon reference price was set at $1,653.50, $15.75 an ounce higher than Wednesday’s afternoon price.

Spot silver was showing a 1.14% gain, bid at $31.06. The morning high as of time of writing was $31.20, and the low was $30.59. Thursday’s reference price was set at $30.70 an ounce in the London a.m., 18 cents below Wednesday’s price fix.

Seasonally adjusted initial claims for unemployment[2] insurance were essentially unchanged last week, worse than consensus expectations, the Labor Dept. reported. At 388,000, initial unemployment claims remain near their highest level of the year. The less volatile four-week moving average climbed 6,250 to 381,750.

With the Fed standing ready to enact additional bond purchases to keep long-term interest rates low, Chairman Bernanke warned[3] Congress and the president that failing to extend some expiring tax cuts could send the U.S. economy off a “fiscal cliff.”

The Chicago Fed’s National Activity Index[4] (CFNAI) fell to -0.29 in March from +0.07 in February, with all four broad index categories registering deterioration. The production, income, personal consumption and housing categories all subtracted from the reading.

The European Union (EU) Economic Sentiment Indicator[5] (ESI) held steady in April at 93.2, while the euro area ESI fell 1.7% to 92.8, offsetting the index’s 1Q gains. Weakening confidence in the industry and service sectors drove the decline, the European Commission reported.

The EU Business Climate Index[6] dropped 0.24 points to -0.52 in April, the EC reported, on “a more negative assessment of export order books, production expectations, past production and orders books.”

Gold bullion prices hovered around $1,650 an ounce in London morning trading Thursday, about where they began the week, according to BullionVault’s London Gold Market[7] report.

“Trend line support [for gold bullion ] is seen at $1,627 on the weekly chart,” BullionVault quoted the latest technical analysis from Scotia Mocatta. “A close below this level on Friday will bring in liquidation selling of stale long gold positions.”

In U.S. stock exchange trading, gold and silver trusts were moving higher as well.

Gold- and silver-mining ETFs were also heading higher.

Gold-mining shares were mixed, with Goldcorp getting hit hard.

Silver-mining shares were moving higher.

As of this writing, Andrew Burger did not hold a position in any of the aforementioned securities. Adrian Ash of BullionVault contributed to this report.

Endnotes:
  1. Kitco market data: http://www.kitco.com/market/
  2. initial claims for unemployment: http://www.marketwatch.com/story/us-jobless-claims-drop-1000-to-388000-2012-04-26?link=MW_home_latest_news
  3. Chairman Bernanke warned: http://www.politico.com/news/stories/0412/75611.html
  4. Chicago Fed’s National Activity Index: http://www.chicagofed.org/digital_assets/publications/cfnai/2012/cfnai_april2012.pdf
  5. Economic Sentiment Indicator: http://ec.europa.eu/economy_finance/db_indicators/surveys/documents/2012/bcs_2012_04_en.pdf
  6. EU Business Climate Index: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/426&format=HTML&aged=0&language=EN&guiLanguage=en
  7. London Gold Market: http://goldnews.bullionvault.com/gold-bullion-042620122
  8. GLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GLD
  9. IAU: http://studio-5.financialcontent.com/investplace/quote?Symbol=IAU
  10. SLV: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLV
  11. GDX: http://studio-5.financialcontent.com/investplace/quote?Symbol=GDX
  12. GDXJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=GDXJ
  13. SIL: http://studio-5.financialcontent.com/investplace/quote?Symbol=SIL
  14. AEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=AEM
  15. ABX: http://studio-5.financialcontent.com/investplace/quote?Symbol=ABX
  16. EGO: http://studio-5.financialcontent.com/investplace/quote?Symbol=EGO
  17. GG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GG
  18. KGC: http://studio-5.financialcontent.com/investplace/quote?Symbol=KGC
  19. NEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=NEM
  20. NG: http://studio-5.financialcontent.com/investplace/quote?Symbol=NG
  21. AUY: http://studio-5.financialcontent.com/investplace/quote?Symbol=AUY
  22. CDE: http://studio-5.financialcontent.com/investplace/quote?Symbol=CDE
  23. HL: http://studio-5.financialcontent.com/investplace/quote?Symbol=HL
  24. PAAS: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAAS
  25. SLW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLW
  26. SSRI: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSRI

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