Daily Market Report 05/21/12

GOLD
Gold hit the key $1,600 per ounce resistances level this morning in Europe before we saw selling. The news out of last week’s G-8 meetings wasn’t surprising and no firm direction for short term gold prices resulted. At 11am PDT, Gold is up $2.40 per ounce, trading at $1,590.60 per ounce on high volume.  

In the minutes of the Federal Reserve’s April 26-27 meeting, the Fed indicated that a third round of quantitative easing (QE3) may be employed if needed - specifically if sovereign debt and European problems dragged the US into the quagmire. The Fed minutes stated “Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough.”

The Federal Reserve is also worried about indecision by the U.S. Congress. At its last meeting in April, the central bank’s top officials discussed how coming tax increases and spending cuts could weigh on the recovery, and debated whether the Fed should provide additional stimulus to spur consumer spending. The Federal Reserve is not alone in its fear of a coming "fiscal cliff" in 2013. The Bush tax cuts, payroll tax cut and extended unemployment benefits are all set to end, at the same time that the government slashes more spending while needing in increase the national debt.

SILVER
After last week’s volatility, it would be nice to see some stabilization with the Silver price staying above $28 per ounce for a little while. At 11am PDT, Silver is trading at $28.40 per ounce, down $0.42 on average volume.