Daily Market Update 12/08/11

GOLD

Disappointment over the European Central Bank’s failure to increase bond buying, which would have provided more liquidity for problem European countries and banks, has driven down equity, energy and precious metal prices globally. At 11am PDT, Gold is trading at $1,711.80, down $29.20 per ounce on excellent volume.

The Central Bank of Europe announced a ¼ % cut in interest rates, which lowers the cost of money for European banks, plus providing longer term financing, up to 36 months. Collateral requirements were expanded as well. The move, in essence, underscored the fact that the ECB is the lender of last resort for banks, not just governments. The Bank of England left interest rates unchanged at 0.5% as well as its quantitative easing program at 275 billion pounds.

SILVER

Silver reacted with gold to the disappointing European news. At 11am PDT, silver was down $0.91, trading at $31.63 per ounce. Silver had a $2.07 trading range of the past 12 hours based on the mixed messages coming out of the European Financial Ministers meetings. More information will be coming from the ECB meeting tomorrow and over the weekend.

Other Important news that affects precious metal prices:

The Commerce Department reported today that U.S. wholesale inventories jumped 1.6% in October to a seasonally adjusted level of $470.2 billion, and September inventories were revised higher to a flat reading from an initially reported 0.1% dip.

The Labor Department reported today that First-time claims for state unemployment benefits fell sharply in the latest week to their lowest level since February. The number of initial claims in the week ending Dec. 3 fell 23,000 to 381,000. The consensus forecast of Wall Street economists was for claims to fall 9,000 to 393,000.