Daily Market Report 8/3/12

GOLD

After claiming last week in London that he would do “whatever it takes” to preserve the Euro, ECB President Mario Draghi disappointed investors. In yesterday’s meeting he failed to outline specific ways of remedying the situation.  He broadly stated that governments should be ready to shore up liquidity, but didn’t mention how this would be accomplished. Should Gold stay below $1,600, the next area of support level is at $1,565.

Today, Gold initially dropped to $1,584 per ounce after the data indicated that US employers hired 163,000 workers in July (the most in five months), curbing expectations that the Federal Reserve will launch further monetary stimulus measures to boost growth. However, Gold quickly reversed the loss as the U.S. Dollar fell versus the Euro. The U.S. Dollar fell because the employment increase of 163,000 was below expectations, and the unemployment rate for July ticked higher to 8.3%. Remember, a higher unemployment rate gives the Federal Reserve a good reason to provide additional monetary stimulus, which is bullish for Gold.  I believe the increase to 8.3% in the U.S. unemployment rate will finally give our Federal Reserve the needed reason to provide QE3 at the September FOMC meeting, and today’s market trading activity reinforces that belief. At 11am PDT Gold is trading at $1,607.20 per ounce, up $20.30 on excellent volume for a Friday.

SILVER

Silver followed Gold today, reaching a low of $26.96 before rallying to a high of $28.04 per ounce. At 11am PDT, Silver is up $0.70, trading at $27.84 per ounce on above average trading volume for a Friday.

PLATINUM & PALLADIUM

Both metals reacted with the Gold rally and unlike Silver, they outperformed Gold’s increase. On a percentage basis, today’s increase for Platinum and Palladium was more than double Gold’s 1% increase.