Daily Market Report 01/30/12

GOLD

Gold trading is virtually unchanged, down $0.60 per ounce at 11am PDT, trading at $1,732.40 per ounce. Gold reached its highest price in more than seven weeks last Friday. Investors awaited the outcome of Greece’s debt deal talks, but slower-than-expected GDP growth within the United States was a minor negative.

Gold also got a boost from reports the world’s biggest hedge fund.  Bridgewater Associates ($120 Billion) is bullish on bullion as a hedge against inflation as governments print more money to reduce debt.

EU leaders will sign off on a permanent rescue fund for the euro zone at the EU Summit today. They are also expected to agree on a balanced budget rule in national legislation, but unresolved problems in Greece could derail those discussions.

Last week’s Chinese New Year caused physical demand in China to be absent. Today’s gold price may look high to Chinese buyers after gold jumped almost 5% while they were away. I’ll be watching physical flows to see whether China jumps in and continues the rally or sit back to see if the market comes back.

SILVER

After an extraordinary price increase last week, up 6.68%, and up 21% since Jan 1^st, the market as paused.

At 11am PDT we are seeing excellent volume, as silver trades at $33.50, down $0.42 per ounce. Domestic demand for physical silver continues at a record pace. As of last Thursday, the U.S. Mint reported selling over 5,547,000 1 ounce .999 Silver Eagles. An extraordinary number considering last year was a record year with almost 40,000,000 sold the entire year.