Daily Market Report 5/2/13

GOLD

Gold went up $17 per ounce early Thursday morning after the European Central Bank (ECB) cut its interest rates by .25% for the first time in 10 months, and President Mario Draghi said the central bank is technically ready for negative interest rates. Lower interest rates favor Gold as they encourage investors to put money into non-interest bearing assets like the metal.

At 11am PDT today, Gold is trading at $1,468 per ounce, up $17 per ounce on excellent volume.

Federal Reserve ponders possibility of increasing stimulus, and worries inflation is too low

The Federal Reserve has an on-going program to purchase $85 billion in bonds each month in an effort to keep long-term interest rates low, and stoke demand. The program is tied to improvement in the labor market, and officials had begun talking about tapering it off after several strong months of job growth earlier this year. But recently US economic data has been disappointing and after its two-day policy-setting meeting that wrapped up Wednesday, May 1, the Federal Reserve Bank explicitly stated for the first time that it could increase, as well as reduce, bond purchases “as the outlook for the labor market or inflation changes.” Additionally, the Federal Reserve is worried that the U.S. inflation rate is “somewhat below” the Fed’s target of 2%.

SILVER

Silver rallied above $24 per ounce earlier today, but couldn’t hold above that support level. At 11am PDT today, Silver is trading at $23.83 per ounce, up $0.30 per ounce on average volume.