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Gold and Silver Down, US Bullion Coins Up

June 29, 2012 – Tuesday saw the first decline in gold in three days in the middle of growing concerns over the European debt crisis and in anticipation of lackluster news out of the European Summit set to begin in a few days time.

Safe-haven buying in anticipation of the European Summit is flowing toward the US dollar instead of gold, which is undercutting a great deal of demand in the market.

Gold prices in US gold futures for August delivery dropped 0.8 percent or $13.50 to $1,574.90 per troy ounce on the Comex exchange in New York.

“There is nothing to sustain gold’s rallies, so we’re susceptible to these profit-taking bouts which will probably continue moving forward,” said Frank McGhee, head of precious metals trading at Integrated Brokerage Services LLC.

Many investors appear to be adopting a “wait-and-see” strategy as the news out of Europe will have an impact on markets.

However, sales of the two most popular bullion products from the US Mint climbed Tuesday to add to the gains made in the previous three days. Data from the Mint shows 22-karat American Gold Eagle added 2,000 to sales and the American Silver Eagle progressed 25,000.

The divergence of the physical market from precious metals markets may be a reflection of the sentiment in advance of this weekend’s economic Summit in Brussels. Thought safe-haven buying down in precious metals, the US Mint data is registered a surge in sales.

There may be good reason for the pessimism in the markets. The German Chancellor Angela Merkel has already set a sour tone for the Summit by making statements close to an outright refusal of the joint-issuance of debt, cross-border deposit insurance, regional bank integration, or using proceeds from bailout funds to buy sovereign bonds.

“When I think of the summit on Thursday, I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures,” Merkel said.

Merkel also said at a press conference earlier this week that euro-bonds and European deposit insurance with joint liability provisions are “economically wrong,” “counterproductive,” and “unconstitutional.”

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