Precious Metals Remain Under Pressure…
Thus far this week the precious metals have been under heavy pressure globally as the economic data has been very U.S Dollar friendly. All eyes are on the two day European Summit which began today as investors hope to receive a better understanding of the true economic condition and the debt crisis that exists in Europe. So far the information coming out the European Union has been as clear as mud. Greece was the first state that had its credit rating lowered followed by Portugal today and unfortunately will probably reveal several more states in need of a financial bail-out including Spain, Ireland, and Italy. Obviously with this many states needing financial assistance the pressure on the Euro has been devastating. Since a weaker Euro means a stronger Dollar and a halt to the precious metals upward momentum.
It had been written in “FOCUS” a German based magazine that the vast Gold reserves in Europe would be used to help stabilize the European Union and give much needed confidence to the Euro. I guess time will tell. There is now speculation that the European states in need of financial assistance may have to turn to the (IMF) International Monetary Fund for financial assistance which could promote inflation and possibly further erode the Euro. The scenario’s change minute to minute.
The Central Bank of Canada has indicated it may raise their interest rates as soon as June 1st. This after the Canadian Dollar had been showing impressive strength against the U.S Dollar
Earlier in the week Gold was hurt by reports showing larger than expected jump in crude oil inventories. The Department of Energy reported inventories rose by 7.3 million barrels much higher than the 1.67 million that was projected.
The U.S Labor Department reported 442,000 Americans filed first time jobless claims last week…14,000 less than the prior week.
Also all metals traders should have an interest in today’s (CFTC) Commodity Futures Trading Commission meeting. Federal regulators in the U.S are discussing whether to restrict the volume of speculative trading…this in response to Gold fever and the higher prices in Gold. What ever happen to the slogan
“FREE MARKETS FOR FREE MEN”……
Speculators provide huge volume and stability to the gold trade!!!! CME Group’s Thomas La Salla (Chief Regulatory Officer) has been quoted as saying “The CFTC’s attempt to put limits on speculative activity on the metals is an attempt by the government oversight agency to overstep its bounds”…..
In my opinion a volume restriction would just send traders into foreign metals. We need to keep the volume and business in the United States…..
Mike Daly / Gold Specialist