Daily Market Report 7/5/12

GOLD

Gold tested the $1,600 per ounce support level this morning, reaching $1,596 per ounce before the price came roaring back on heavy demand. At 11am PDT, Gold is trading at $1,608.90 per ounce, down $12.30 per ounce from the Tuesday price. Trading volume is above average for a holiday week.

The European Central Bank lowered interest rate to 0.75% from 1% and cut the deposit rate to 0.0%. The Bank of England left interest rates unchanged at 0.25% but did inject an additional 50 billion pounds of monetary stimulus via fresh asset purchases. Both of these government actions are very bullish for Gold in the short and long term.

SILVER

Silver is fighting to stay above the $28.00 support level, but traded down to $27.45 per ounce in early morning trading in Asia. At 11am PDT, Silver is down $0.60 per ounce, at $27.75 per ounce on average volume.   

Wheat and Corn prices are increasing on the commodity exchanges. This increase is due to the hot weather in many of our farm states. Pricing increases on the futures commodity exchanges is an excellent indication of higher prices in the grocery store in three to six months. This is inflationary and would be bullish for Silver in the long term.