Daily Market Report 06/07/12

GOLD
This morning in testimony to Congress, Federal Reserve Chairman Ben Bernanke gave no hints of any new monetary stimulus, and he said that the U.S. economy will grow moderately this year despite last week’s disappointing report on May job growth. Gold immediately sold off on his remarks, falling to $1,588 per ounce (below the important $1,600 support level). At 11am PDT, Gold is down $43.40 per ounce, trading at $1,590 per ounce on active volume. I am hoping that during overnight trading in Asia and Europe, Gold will rally back above the $1,600 per ounce support level.

Central Banks Keep Buying Gold
Kazakhstan’s central bank will increase the share of Gold in its foreign exchange reserves to 15% from about 12%, it said on Thursday, a day after announcing plans to cut its holdings in the ailing euro by a sixth. The bank’s deputy chairman, Bisengali Tadzhiyakov, told parliament it had signed contracts to buy 22 tonnes of Gold, worth more than $1 billion at current prices.

This purchase continues to show the conviction of the world’s central banks, especially in emerging economies, to diversify into commodities as an asset class.  With poor Indian demand for physical Gold/Silver bullion products, the demand of central banks has, and will, prove to be an important floor in the market.

SILVER
Silver took its lead today from the trading action in Gold. After Bernanke’s statement, Silver dropped to $28.32 per ounce, before demand came in to stabilize the market. At 11am PDT, Silver is trading at $28.67 per ounce, down $0.98 per ounce on heavy volume.