Prices for all four precious metals ended the day up in afternoon trading, with Silver and Platinum in particular both continuing to gain since the posting of the  Mid-Day Gold & Silver Market Report. The Gold price has seen a slight drop since noon, although it still ended the day in positive territory, while Palladium has stayed relatively flat. Yesterday’s downward movement in precious metals came in response to Federal Reserve Chairman Ben Bernanke’s testimony before a congressional committee in which he gave no indication that a third round of quantitative easing is under consideration by the Fed. Julian Jessop of independent macroeconomic research consultancy Capital Economics called the movement by the metals overdone and said that he feels the appeal of Gold will make up for the unlikelihood of a QE3. Referring to that appeal, Jessop said, “It is the risk of a renewed escalation of the eurozone crisis that underpins our forecasts.” Analysts with bullion broker Sharps Pixley in London suggested that yesterday’s Gold pullback could be a window of opportunity for investors looking to get into Gold, saying in a note to clients, “The long-term Gold story remains unchanged.”

In a report prepared for the so-called Group of 20 nations, the International Monetary Fund (IMF) stated that  economic hazards in Europe still threaten the recovery of the world economy. The report described the global economy as facing “major downside risks.” Based on the IMF’s report, the forecast for the eurozone’s economy is that it will undergo a 0.5 percent contraction in 2012. Additionally, economic expansion worldwide will experience a slowdown from last year’s rate of 3.8 percent to a rate of 3.3 percent this year. According to the report, “The overarching risk remains an intensified global ‘paradox of thrift’ as households, firms, and governments around the world reduce demand. This risk is further exacerbated by fragile financial systems, high public deficits and debt, and already-low interest rates.” The report also stated that policy-makers in the United States have yet to make any progress toward a “credible medium-term fiscal adjustment plan.”

At 4:13 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,719.60 – Up $7.80.
• Silver - $35.58 - Up $0.92.

Precious metals prices have rebounded slightly from yesterday’s volatility. The gold market was largely influenced by the perception presented in prior remarks by Fed Chairman Bernanke, but were almost roundly squelched in prepared statements before the House of Representatives yesterday. Today he is scheduled to sit in front of the Senate. Standard Bank’s Walter de Wet echoed that sentiment, having said, “We had a sense that the  gold market was increasingly pricing in QE3, and obviously Bernanke has put a dampener on that.” However the drop in prices really pushed physical sales of the metal, with some dealers saying, “It's been a long time since we (saw) such decent buying.”

In his speech before the House yesterday, there was a lot of cautious optimism surrounding comments made by Chairman Bernanke. Although there are “positive developments” in the job market it is still “far from normal.” He also mentioned that any impact of higher gas prices would most likely be temporary. He also said, “Monetary policy is not a panacea… It can help offset cyclical fluctuations and financial crises like we’ve had, but the long-term health of the economy depends mostly on decisions taken by the Congress and the administration.” Time to look forward to today’s message and economist Eric Green probably says it best, “The nice thing about this is  he always has a chance to refine his message  on the second day.”

The global economy stands on a precipice of uncertainty surrounding oil. A U.S. advisory body has found that  trade sanctions against Iran are already having an impact  before they officially go into effect. There are already talks of shortages in supply, which will just drive the price up even higher. The biggest customers of Iranian oil China, Japan and India are entangled with the U.S.-led sanctions. Another key issue is the OPEC supply is fulfilled by Iran. They are the second largest OPEC producer behind Saudi Arabia, so any additional supply is going to be very limited. Former State Department adviser Trevor House affirmed that sentiment when he said, “With oil inventories and spare OPEC production capacity running low, consumers don't have much buffer against additional disruptions in supply… That means the needle the administration has to thread to pressure Iran without raising oil prices has gotten even smaller.”

At 8:00 a.m. (CST) – the APMEX precious metals spot prices were:

• Gold - $1,705.70 – Up $8.60.
• Silver - $34.68 – Even

Gold and Silver experienced drastic sell-offs today after testimony by Federal Reserve Chairman Ben Bernanke before the House Financial Services Committee. Bernanke indicated that  the Fed is not likely to consider a third round of quantitative easing. Prices for Gold and Silver ended at their lowest points since December. With the view of the market being that a QE3 might not happen or even be needed, the dollar has surged at the same time that the outlook for commodities such as precious metals has turned bearish. Jim Steel, chief commodities analyst for HSBC, said, “In recent trading, Gold neared but was unable to get over the most recent high of $1,803 per ounce set in November 2011.” Steel said the factors were right for a Gold sell-off due to sell-stops that were triggered today, a decrease from emerging markets for physical demand, and continued declines in oil prices. However, Steel said he anticipates continued volatility in precious metals markets and suggested that today’s activity might be the result of a pullback. “Accommodative monetary policy is still there, and so are the underlying factors for higher Gold prices.” Meanwhile, his firm’s expectation is that the Gold price will climb again and average $1,850 per ounce this year.

Another piece of news that came out of Bernanke’s testimony Wednesday was the revelation that work by the Fed and other regulators on  the Volcker Rule won’t be finished in time for its July deadline. Named for former Fed Chairman Paul Volcker, the Volcker Rule’s goal is to prevent banks from engaging in proprietary trading while also limiting their ability to invest in hedge funds and private equity. Bernanke said, “I don’t think it will be ready for July. Just a few weeks ago, we closed the comment period. We have about 17,000 comments. We have a lot of very difficult issues to go through, so I don’t know the exact date.” When asked by a committee member whether the rule would be proposed again, Bernanke avoided a direct response, instead saying that the Fed wanted to ensure that firms “have an adequate period of time to adjust their systems and comply with the rule.” When the committee member then expressed the view that the Fed wouldn’t be enforcing a rule that wasn’t officially in place, the chairman responded, “Obviously.”

After reporting a $2.4 billion loss for the fourth quarter of last year, government-controlled mortgage finance company Fannie Mae said today it will seek  additional financial aid in the amount of $4.6 billion. The company, which together with its fellow government-run mortgage finance company Freddie Mac backs about half of this country’s outstanding mortgages, already has borrowed more than $116 billion in government funds. Both declining home prices and the “soured” loans Fannie Mae still has on its books from 2008’s housing crisis have made being profitable a challenge for the mortgage firm.

At 4:15 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,697.10 – Down $90.30.
• Silver - $34.68 - Down $2.51.
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• Gold - $1,695.90 – Down $91.50.
• Silver - $34.66 – Down $2.53.

Precious metals are trading relatively flat this morning,  echoing U.S. stock futures.  The European Central Bank’s refinancing operation resulted in 529 billion euros of three-year loans being auctioned to the banking sector.  This was higher than some analysts expected, and markets were flattened after the news.  The latest revision of 2011  fourth-quarter U.S. gross domestic product showed that the economy grew 3%  that quarter, up from 2.8%.  This had little effect on market movement or precious metals.

A possible reason for the lack of market movement is that investors are waiting for Federal Reserve Chairman Ben Bernanke’s testimony before the House Financial Services Committee later this morning.  Performance Trust Capital Partners’ Brian Battle said that he doesn’t “expect any surprises in the written testimony, but the Q& A portion could be interesting.  This is the new era of transparency and the Fed has been trying to be more detailed and descriptive.”  Regarding the economic data due later today, Battle added, “Unfortunately, economic numbers aren’t real drivers [of the market] these days.  We’re still driven by headline news.”

U.N. sanctions on Iran are underway, though some nations are struggling to comply.    U.S. Secretary of State Hillary Clinton said that some allies, such as Japan, face unique situations in the effort to  reduce Iranian oil imports.  The sanctions are an effort to hamper the ability of Iran to produce atomic bombs, since oil exports account for much of its economy.  She said, “I think that there’s a very clear-eyed view of Iran and Iranian objectives and that’s why the president’s policy is so clear and adamant that the United States intends to prevent Iran from obtaining a nuclear weapon.”  Iran has previously threatened to counter sanctions either by military force or by blocking the Strait of Hormuz, which could severely impact the transportation of oil from the most oil-rich region in the world.

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,781.00 – Down $6.40.
• Silver - $37.03 – Down $0.15.

Shaking off yesterday’s downward ending, the price of Gold  ended the afternoon at its highest point in three months. With analysts saying that long-term support for gold is solid, investors took advantage of the previous two sessions’ price drops and enthusiastically purchased the precious metal. The price of Silver also saw a healthy jump today, rising over 4.5% and ending its highest since this past September. Precious metals prices in general were helped out by rise in the euro and a drop in the dollar, and Platinum and Palladium ended the day up as well. According to precious metals analyst Jim Steel with HSBC in New York, “We’ve got a very nice jump for the euro. That has lifted gold up pretty strongly,”

In an interview with CNBC today,  Pimco CEO Mohamed El-Erian stated that the Greek bailout package will probably fail. The real issue now, said El-Erian, is if Greece’s debt crisis can be contained or if they will spread to other countries in the eurozone. " Greece has been sacrificed in order to build that firewall," said El-Erian, referring to efforts by European leaders ensure that Europe’s banking system stays capitalized in the event of a member-country default. “In Greece, we are sustaining the unsustainable, and it comes at a cost and the cost is a society that has to put up with tremendous austerity without seeing a light at the end of the tunnel. That's why this package will fail just like the previous package failed.” El-Erian also said that if and when the Greek bailout fails, Portugal, which also has significant debt issues, will be the next country in the eurozone’s spotlight.

There has been a reasonable amount of speculation about the effects of rising fuel prices on consumers, with the general view being that the positive outlook on employment and the drop in natural gas prices have compensated for the increase in the cost of gas. However,  recent data from research firm Consumer Edge Insight provides information about the possible consequences of a reversal in current optimism about employment. It also indicates that despite those trends, consumers are actually curtailing their spending. The firm’s data, which comes from measuring and comparing 32 discretionary categories against their performance from the previous year, shows that despite positive employment news, consumers had a negative outlook on the job market in February. Additionally, January’s pessimism by consumers about family income potential continued through February as well. The data also shows that consumer spending has dropped dramatically over the past month. Discretionary spending for February only increased by 0.4%, versus 1.3% in January and 2.3% in December. One has to wonder if consumer spending is slowing in the face of relatively good employment news, what would happen if employment numbers took another downturn, and what would be the overall affect on the economy?

At 4:09 p.m. (CST), the APMEX precious metals spot prices were:

· Gold - $1,784.20 - Up $10.30.

· Silver - $36.97 - Up $1.39.

After significant gains pushed Gold to end the previous week up by 2.9 percent,  profit-taking by investors caused the price to end the day slightly down in afternoon trading. The metal ended the day down just 0.1 percent based on Gold futures for April delivery. Platinum and Palladium were slightly down, as well. In contrast, the Silver price ended the day slightly up. However, an analyst with CPM Group in New York said Gold is still “well supported,” and this week should see the price per troy ounce climb to more than $1,800 as investors react to economic news over the next few days. Expected to drive the Gold price this week will be the release of consumer confidence, gross domestic product, and manufacturing data for the United States. In addition, the Federal Reserve will release its Beige Book of economic conditions, and Federal Reserve Chairman Ben Bernanke will begin a report to lawmakers on monetary policy that is expected to last two days. Both Fed events are set for Wednesday.

In the face of positive performance by Wall Street stocks, many analysts have predicted a correction that hasn’t happened so far. The first two months of 2012 have been the best start of any year in the market’s history, declines for a single day have stayed below 1 percent, and the S& P 500 Index has surpassed forecasts for the full year. But those who take a bearish view of the market say that this abundance of seeming good news makes a  big market pullback even more likely (based on continued geopolitical turmoil, among other things), and they expect a drop in stock prices of at least 10 percent, if not more.  A recent survey by the Bespoke Investment Group shows that the bears outnumber the bulls these days, and many of those polled expect the S& P 500 to fall within the next month. In a note to his clients today, Jeff Saut of Raymond James wrote, “The rise since the ‘buying stampede’ ended, which stopped on Jan. 26, 2012, at Dow 12,841.95, has felt unnatural to me.” Many bearish analysts point to the Dow Jones Transportation Average’s failure to match the highs of the Dow’s Industrial Average -- as would be expected according to “Dow Theory” -- a sign of an inevitable market correction.

At 4:01 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,767.80 – Down $7.60.
• Silver - $35.43 – Up $0.04.