Daily Market Update 6/22/11

GOLD
Gold continues to move higher on weak economic news and world events. At 11am PDT, Gold is at $1,553.60, up $8.30 an ounce in active trading. We anticipate a market reaction after Fed Chairman Bernanke’s news conference later today. The Federal Reserve Open Market Committee (FOMC) stated earlier today that they will leave interest rates low for an "extended period of time".

First it was Goldman Sachs, the Paulson investments, JP Morgan, Deutsche Bank, Barclays Bank, HSBC Bank, and Standard Charter Bank all highly bullish on the price of gold. Now, its Bank of America/Merrill Lynch who just said that investment demand required to sustain gold prices in a range of $1,500-2,000 per ounce could be feasible in the next five years. The brokerage believes investment has had a critical influence on the gold market and investor buying is the key to its long-run supply and demand balances.

The People’s Bank of China said it would boost the production of the popular Gold Panda coins, China’s official bullion coin, to 1.06m ounces in 2011, from about 500,000 ounces planned at the start of the year and 400,000 ounces last year. In addition, it plans to raise production of Silver Pandas to 6.4m ounces from its earlier plan of 3.4m ounces.

SILVER
At 11am PDT today, Silver is up $0.25 an ounce, trading at $36.65.  Silver feels like its treading water awaiting any QE announcement.  Bill Gross of PIMCO feels that the Federal Reserve will announce a new round of quantitative easing (QE) at its August meeting in Jackson Hole, WY. Gold is definitely the leader in the precious metals group, while Silver continues to build its base. World demand is strong, however, going into the summer months and I expect domestic demand to slow down.  

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