GOLD HITS A TWO-WEEK LOW, U.S. FEDERAL RESERVE PROCEDURE REVIEW 

Gold and other precious metals prices are seeing a significant dip in price today. The price of gold has fallen two percent today, which is the largest drop in three weeks. The gold price dropped twenty dollars in a five minute span this morning due to a large sell-off of the precious metal.  Over two million ounces of gold futures were traded in that short time frame.  " Clearly if a trader was looking to take profit on his positions then one would finesse metal into the market slowly - so not profit-taking going on here. More likely this could be a short play, with the seller looking to trigger stops below the market and thus extend the move lower significantly. If so, he certainly caught the market on the hop as the move is counter-intuitive with everything else that is going on in the economy." Sharps Pixley chief executive Ross Norman said.

Earlier in the week the European finance ministers agreed on a plan to help debt ridden Greece work towards financial stability. While the main point of the plan was to push back the deadline of reaching the country’s financial goals.  Another point that has not gotten as much press is the talk of simply forgiving some of Greece’s debt completely.  German Finance Minister Wolfgang Schaeuble hinted at the idea in a news conference yesterday. When Greece has achieved, or is set to achieve, a primary surplus and fulfilled all of its conditions, we will, if need be, consider further measures for the reduction of the total debt," he said.

In the United States the Federal Reserve has continued to keep their financial easing program in place indefinitely. The main key to the easing program is the level of interest being charged on loans. It has been kept around zero percent and there has been no indication of when that will change. Charles Evans, president of the Chicago Fed gave his opinion this week. He believes the interest rate should remain low until the U.S. unemployment rate improves.  It is unusual for any member of the Fed to give specifics on guidelines for policy changes.  However, the idea of doing so is gaining support. Janet Yellen, second in command to Chairman Ben Bernanke on the Federal Reserve Board recently said, " I support this approach because it would enable the public to immediately adjust its expectations concerning the timing of liftoff in response to new information affecting the economic outlook." While now this is just opinion, time will tell if this could lead to new procedures at the Fed.

At 1:00 pm (EDT), the APMEX precious metals spot prices were:

• Gold, $1722.40, Down $21.90.
• Silver, $33.81, Down $0.26.

Precious Metals prices and stock futures are lower this morning after  statements made yesterday by Senate Majority Leader Harry Reid. Reid said that Republicans and Democrats of Congress are still far apart in agreeing on proper way to avoid the fiscal cliff. Stephen Pope of Spotlight Ideas said, “I can’t believe anyone really believes that in the first serious get-together post-election, anyone will walk out and say, ‘You know what guys, we agree on everything.’ I think … you’re going to see, going forward from here, a repetition of yesterday, with people making grandstanding statements – a bit like how it’s gone in Europe – and trying to flex their muscles.”

With the end of the year just around the corner, many eyes are on Italy as the  next country in the eurozone that will need a bailout. Italy is the eurozone’s fourth-largest economy, and with Spain also in a constant state of will-they-or-won’t-they in regards to requesting a bailout, the problems only continue in the region. Citi Analyst Giada Giani said, “Italian economic fundamentals have not really improved, despite some improvement in market conditions. The negative feedbacks from fiscal austerity on growth have been severe.”

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

• Gold, $1,716.50, Down $27.80.
• Silver, $33.44, Down $0.62.

The Gold market has stayed mostly level for the day, ending a bit lower than Monday’s close. One of the main reasons for the decrease has been a rebound in the value of the United States dollar. October’s demand for products such as machinery and electronics went up the most in five months.Another reason is a lower than expected demand from India. India has been the leading in Gold buying, and when their demand goes down, the market feels the affects.

In the United Kingdom, the economy has experienced the same issues that plague the rest of the global economies. The U.K. has a growing budget deficit and slower than anticipated growth. Next week the countries finance minister will give his annual Autumn Statement to show the path which they will follow to progress through the economic turmoil.  If a solid plan is not given, there is a strong possibility that England could lose their triple-A credit rating. “The U.K. can only be given the benefit of the doubt for so long. The ratings agencies want to see debt metrics stabilize in the medium term. If fiscal pain is kicked too far 
down the road, a downgrade is inevitable,” HSBC’s chief U.K. economist Simon Wells said in a research note.

In the United States, all eyes are fixed on the capitol and the outlook of avoiding the fiscal cliff. News of both sides softening their stance on certain issues has brought hope to the crisis, however, both sides are reportedly far away from a deal.  The largest issue seems to be taxes, or lack thereof. “There remains no clarity on the ultimate status on the Bush tax cuts, which have to be resolved before you can move forward with the remainder of the fiscal cliff,” Chris Krueger, an analyst at Guggenheim Securities’ Washington Research Group, said.

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

• Gold, $1743.90, Down $7.70.
• Silver, $34.10, Down $0.11.

Gold and Silver prices are basically flat this morning amid news that the eurozone and the International Monetary Fund have  reached a debt deal for Greece. The country’s debt level will be lowered to a more sustainable level, and ultimately, this deal will lead to the next $44 billion tranche of aid being released to the country. German Chancellor Angela Merkel, who many consider the political figurehead of the eurozone as Germany boasts the largest economy in the region, is coming under fire for doing the “bare minimum” to keep Greece solvent.

Gold prices gave up gains that were originally attributed to the debt deal in Greece when Federal Reserve Bank of Dallas President Richard Fisher stated concerns with regards to the latest round of quantitative easing in the U.S.  Fisher’s comments boosted the dollar, and the Gold price reacted negatively. Saxo Bank analyst Ole Hansen said, “Gold is trying to consolidate now after making the push higher on Friday. … We are creating the foundation for a push higher to levels seen earlier this year.”

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

• Gold, $1,750.30, Down $1.30.
• Silver, $34.20, Down $0.01.

Gold remains flat for the day, and other equities and commodities are down as investors focus on Europe’s financial crisis and the concern that Greece will need a second bailout. “Most of the activity came from CTAs (Commodity Trading Advisors)  and hedge funds who were either adding to longs or reversing their shorts. It seems that the expectations for the Fed's planned actions are stronger now than they had been before the election,” Carlos Perez-Santalla, a broker at PVM Futures, said. The future potential distress to the U.S. economy is the quickly approaching fiscal cliff and whether or not politicians will come to an agreement that is satisfactory for all. We’ll keep you updated on the latest news.

A report commissioned by European think tank The Lisbon Council and Germany-based Berenberg Bank reflects good news for the eurozone debt crisis as they suggest the predicament may be contained in 2013 barring any major policy mistakes. “If the eurozone gets through the current acute crisis and stays on the reform path, it could eventually emerge from the crisis  as the most dynamic of the major Western economies,” Holger Schmieding, chief economist at Berenberg Bank, said on Monday.

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

• Gold, $1,750.70, Down $2.70.
• Silver, $34.21, Up $0.03.

Gold continues to hover around $1,750 today  after ending last Friday its highest point since mid-October. Analysts continue to cite European debt struggles and the upcoming fiscal cliff as the main movers of the U.S. dollar and the Gold price. “Gold has now found some very strong buying since the dip below $1,700, and we anticipate the rally to continue as deep bullish fundamentals are still in place — the Europe/Greece uncertainty and the U.S. fiscal cliff uncertainty,” Anthony Lazzara, chief executive officer of Lido Isle Advisors, said. Global and domestic economic concerns continue to convince analysts that there is no reason for Gold to trend any lower heading into 2013.

Budget dialogue in Washington and concern regarding aid to Greece  caused U.S. stocks to decline on Monday. Holiday shopping caused large gains in the stock market on Friday, but profit-taking after such a large rally also caused stocks to weaken. As we approach the end of 2012,  fiscal cliff and European debt concerns will remain at atop  financial headlines. Regarding world economic news, Peter Sorrentino of Huntington Asset Advisors in Cincinnati said, “We’ve got a lot of negatives. There’s the backdrop of what’s going on in the European Union with the bailouts and recapitalizing the banks. On top of that, we have issues in the U.S. with regard to our fiscal policy. That’s just enough reason at this point in time to take risk off the table and wait for more insight and clarity.”

At 1 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,751.90, Up $1.50.
• Silver, $34.14, Up $0.05.

U.S. stock futures look to start lower today. Negotiations will continue today between the President Obama and top congressional leaders as they try to come to terms on upcoming tax increases and spending cuts, otherwise know as the Fiscal Cliff. Greece is still in the news as the euro-area finance ministers are in discussion over the next round of aid for the country’s distressed economy.Henrik Drusebjerg, senior strategist at Nordea Bank said, “We could see U.S. markets start positively, but they’re a bit nervous about Greece.”

Today, if you weren’t already aware, is Cyber Monday,  a term that was coined back in 2005. Economically, it is a boost to the retail sector as was Black Friday and Small Business Saturday. It’s estimated that today’s Cyber Monday will be the biggest online shopping day of the year for the third year in a row, up 20 percent from last year.

The Gold price stayed near its five week high in overnight trading even after the dollar strengthened.  Edel Tully, an analyst at UBS AG in London said,  “The uncertainties surrounding the euro group meeting on Greece have impacted the euro-dollar and in turn Gold.”

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

• Gold, $1,753.40, Up $0.00.
• Silver, $34.21, Up $0.03.