Daily Market Report 9/19/12

GOLD

The Bank of Japan this morning announced that it will increase its asset buying and loan program by 10 trillion yen ($127 billion). Central bank accommodation is generally viewed as supportive of Gold because it devalues paper currencies and leads to future inflation. Its move also comes on the heels of recent major monetary easing announcements by the US Federal Reserve and the European Central Bank.

After announcing QE3 last week from the FED and the continuing support of a European "Quantitative Easing" program Japan’s central bank needs to follow suit with its own support for its economy. Currently Japan is feeling the pinch from a strong yen and needs the stimulus to grow their economy which continues to be bullish for Gold as more and more currency floods the market.

Traders also continue to buzz over comments from Federal Reserve Bank of Chicago president Charles Evans, a noted dove, who yesterday gave a passionate defense of QE3 and reaffirmed the Fed’s determination to reverse the current trend of low economic output and high unemployment. The Federal Open Market Committee (FOMC) last Thursday announced it will make open-ended purchases of $40 billion worth of mortgage-backed securities (QE3) each month until there is sustained improvement in the labor market.

And in India, the 10-day Ganesh Chaturthi festival starts today. Gold is bought during this time because it is deemed an auspicious period to do so.

At 11am PDT, Gold is trading at $1,771.40, down $0.70 per ounce on normal volume.

SILVER

Silver has been trading and building a nice comfort zone in the $34 range. It has run up against the $35 level twice in the last day with selling immediately after. It appears to be showing strong support currently over the $34.30 level and is just waiting to take it’s next run over $35 on any positive news. At 11am PDT, Silver is trading at $34.72, down $0.16 per ounce on average volume.

PLATINUM

Signs that tensions are easing in the South African mining industry may put downward pressure on prices. Lonmin, the world’s third-largest Platinum producer, has signaled that it has reached an agreement to a month-long wildcat strike that cost the lives of 45 people. In a statement released last night, the company said a deal has been reached in Rustenburg that includes the payment of a bonus worth 2,000 rand ($245) and an average wage increase of between 11 and 22 percent for workers. Employees, who had been asking for a doubling of their pay, should return to work on Thursday.

At 11am PDT, Platinum is trading at $1,644, up $11.