Precious Metals prices were reacting to this morning’s United States nonfarm jobs report that showed96,000 jobs were created in August. The number was disappointing because it fell short of the 125,000 that had been expected.  This news was bullish for Gold  and boosted the possibility of financial stimulus from the Federal Reserve. The expectation is that the Federal Reserve will announce the next round of quantitative easing, better known as QE3, this year. Jeremy Friesen at Societe Generale in Hong Kong said he believes the Fed will act possibly this month. He said, “We think the payrolls number will be very poor, which should be positive for Gold, as it would confirm that the Fed will do something at the next FOMC (Federal Open Market Committee) meeting.”

The European Central Bank announced Thursday its intention to rebuild the eurozone with new stimulus measures by purchasing sovereign bonds. Alex Merk at Merk Investments commented on how the market may be more interested in the euro. “Now, I’m not going to pretend that everything is going to be great in the eurozone, but it (the ECB’s measures ) does take off the so called ‘tail risks,’ it makes the euro less risky.” On a positive note, Merk added, “We think the euro is going to do well in the years to come. … It is becoming a different currency with different dynamics in place.”

At 9:17 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,729.30, Up $24.70.
• Silver, $33.32, Up $0.65.

Gold’s early session gains were pared as several good economic reports increased doubts about seeing any economic stimulus in the short term. Payroll processor ADP reported positive employment numbers, and the United States Labor Department said first time unemployment claims fell to their lowest number since mid July. The Labor Department will release its official report Friday. Depending on Friday’s job report, gold could go above $1,700 an ounce, HSBC’s James Steel said. A positive report could offer some headwinds, “but overall the market still looks pretty firm,” he said.

Gold was not the only beneficiary after comments by European Central Bank President Mario Draghi. The S& P 500 index reached a four year high, and the price of Treasuries fell on growing optimism. “The market was looking for signs that the ECB and some part of the European Union would basically stimulate in Europe and guarantee the sovereign debt,” David Pearl at Epoch Investment Partners said. “Draghi pretty much gave what the market was looking for. The U.S. data is at least moving positively, and we’re in a recovery.”

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

• Gold, $1,701.70, Up $8.70.
• Silver, $32.69, Up $0.36.

“The euro is irreversible,” said Mario Draghi, European Central Bank president, as he announced a bond buying program at a news conference in Frankfurt.  The program is called MOT, or Monetary Outright Transactions. MOT will focus on the secondary sovereign bond market, where Draghi said it is necessary to deal with “severe” distortions in those bond markets.

Ahead of the meeting, Precious Metals prices were up across the board. Most notably, the Gold price was again higher than the $1,700 mark. The euro has gained against the dollar due to Draghi’s remarks that he would do  “whatever it takes”  within the ECB’s mandate to save the euro. It will take time to see if the MOT program is considered “whatever it takes” and keeps the euro going. Gold has a strong inverse correlation to the American dollar, and as we have seen the euro rally, we have also watched Gold rally with it. Gold is at a five month high.

Closer to home, today’s jobless report showed jobless claims decreasing.  Estimates are that claims decreased by 12,000.  Although this isn’t a monumental improvement, it is a step in the right direction, and any positive movement is welcomed.

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

• Gold, $1,702.00, Up $9.40.
• Silver, $32.64, Up $0.32.

Gold and Silver prices showed little movement Wednesday. The markets are speculating that an unlimited bond buying program may be announced at the European Central Bank’s policy meeting Thursday.  The assumption is that the ECB will have many options to present to the Governing Council to consider, but there is no guarantee any of the ideas will be acted upon at Thursday’s meeting. 

Gordon Chang, author of “The Coming Collapse of China,” spoke with CNBC today regarding China’s economy and how some data reflect zero growth for that nation. Chang said that manufacturing surveys, price indices and electricity production are all key indicators of economic growth, and  those factors suggest no growth in China’s economy. Chang said, “By far the most reliable indicator of Chinese economic activity is the production of electricity. When you look at the April through July period, electricity production increased by less than an average of 1.2 percent.” He said electricity production typically outpaces economic growth.

At 5:15 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,694.00, Down $0.50.
• Silver, $32.31, Down $0.11.

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.

The Gold price rose to a five month high today on quantitative easing news out of Europe and the United States. James Steel of HSBC said that “it’s the avalanche of money argument” in regards to Precious Metals’ gains recently. Andrey Kryuchenkov of VTB Capital said, “All that promise (of quantitative easing) needs to turn into concrete action. And for Gold in the long run, it needs any sort of liquidity boost, or balance sheet expansion, and for bond yields to stay low.”

Drakon Capital’s Guy Adami said he believes the quantitative easing news will send  Gold to a new record price. “I don’t think it has anything to do with fear (about fiat currencies). It has everything to do with what’s coming down the pipe,” he told CNBC. “Again, I’ll say, although it’s painful on the down days, and there have been a number of them, I think Gold is what’s going to win,” he said. “One day we’re all going to wake up, and the price of Gold is going to be a lot higher than it is now. When I say a lot higher, I mean north of $2,000.” Adami is a firm believer in Gold’s future.

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

• Gold, $1,696.70, Up $10.60.
• Silver, $32.38, Up $0.94.

Comex Gold futures are slightly higher this morning, setting new five month highs. Gold and Silver prices shot upward after Federal Reserve Chairman  Ben Bernanke seemed to open the door to QE3  in his speech at Jackson Hole, Wyo., last week. Now, markets are focused on the monthly meeting of the European Central Bank, which is set for Thursday. Many analysts expect the  ECB will announce a monetary stimulus plan  that will boost both stocks and Precious Metals.

Adding more pressure to the ECB, Moody’s Investors Service changed its eurozone outlook to negative. Moody’s warns that if it lowers the ratings of Germany, France, the United Kingdom and the Netherlands (the European Union’s four biggest budget backers), it might just downgrade the entire eurozone bloc.

The United States and Europe may not be the only economies on the verge of receiving a stimulus. Although the Chinese government has yet to implement any stimulus measures in the face of a  slowing Chinese economy, there is additional evidence that the Chinese economy is slowing. On Saturday, the official manufacturing sector survey reported a 49.2 reading in August. This falls below the level of 50 that separates expansion from contraction. In another survey more focused on small to midsize businesses, published by HSBC, the number was 47.6.

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

• Gold, $1,691.70, Up $5.60.
• Silver, $32.20, Up $0.76.