Precious Metals prices have rallied on quantitative easing talk domestically, as well as internationally. Gold in particular is continuing its upward movement as a result of the easing talk. DoubleLine Capital commodities manager Jeffrey Sherman said, “The Gold market has been looking for any hints of any quantitative easing program. You are seeing this  big bounce today  off the fact that there could be something going on in euro land.” The European Central Bank potentially will create new money to help sovereign bailouts within the eurozone, a potential boost to Gold prices.

New home sales have fallen, creating a bit of a setback to the nominal housing market recovery. The decline was primarily due to a huge sales drop in the Northeast. Economist Yelena Shulyatyeva said, “Housing will continue to recover gradually throughout the year, but fundamentals are not supportive of a fully fledged housing market recovery.” Meanwhile, fundamental data still suggest a marginal recovery. Economist Joel Naroff said, “It is hard to believe that the market is turning downward when the home builders confidence index jumped in July to its highest level in over five years. Either developers are clueless, or  the data have yet to catch up with reality. I am on the side of the latter.”

Meanwhile, concerns continue to grow over eurozone debt fears as a number of high ranking officials and even prime ministers are planning to take time off for  the European holiday season. After issuing a statement yesterday blasting bond traders for driving up Spain’s borrowing costs, Germany’s Finance Minister Wolfgang Schaeuble is now on a three week vacation. However, Germany’s Schaeuble and Chancellor Angela Merkel are supported by gains in the German bunds markets. The top two German officials’ vacation plans have investors looking elsewhere for crisis management.

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,605.30, Up $27.10.
• Silver, $27.39, Up $0.49.

The Gold price has made a significant move upward today due to uncommonly positive news from Europe. Andrey Kryuchenkov, an analyst at VTB Capital, said, “The (European Central Bank) comments that the (European Stability Mechanism) can eventually get a banking license and a pronounced euro rebound against the U.S. dollar drove Gold prices to two and a half week highs.”

The good news out of Europe today could be short lived.  Reports from Spain and Greece are far from positive.  In Spain, debt is getting to the point of needing a full bailout. In Greece, the problem is paying on the bailout already received. Greece’s Prime Minister Antonis Samaras said, “There are certainly delays in this year’s agreed program, and we must quickly catch up.” Another official, speaking on condition of anonymity, was more blunt: “The debt sustainability analysis will be pretty terrible.”

The issues in Europe have not gone unnoticed by United States Treasury Secretary Timothy Geithner.It has been seen that when a large global economic power such as Europe struggles, the effects are seen worldwide.  “The economic recession in Europe is hurting economic growth around the world, and the ongoing financial stress is causing a general tightening of financial conditions, exacerbating the global slowdown,” Geithner said in testimony before the House Financial Services Committee.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,606.90, Up $28.70.
• Silver, $27.40, Up $0.50.

American stocks closed the day with a third straight loss of 100 points or more in the Dow Jones Industrial Average.  Fears of European problems drove markets  after Moody’s lowered the outlook on German and Dutch debt this morning. Germany, the strongest economy in the eurozone, has been seen as a safe haven and has benefited lately from incredibly low interest rates.  Interest rates on German debt did increase today, although strong demand still kept the fluctuation low. 

The same safe haven appeal kept the  Gold price relatively steady today, with a slight increase, despite an increase in the value of the dollar. “Gold is mostly taking its cues from the euro/dollar. Volume is pretty decent, suggesting there are good underlying bids here,” said Jonathan Jossen, an independent COMEX Gold options floor trader. Weak global manufacturing data has been taking its toll on Palladium lately. Palladium, mostly used by the automobile industry in catalytic converters, hit its lowest price of 2012, $551.68, before rebounding slightly. Prices for Silver and Platinum, metals also driven by industrial demand, fell as well.

At 5 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,581.80, Up $2.90.
• Silver, $27.02, Down $0.11.

Precious Metals continue to hold firm in the serious headwinds affecting other commodities markets. Gold in particular has been relatively range bound, but in the current market conditions that’s not an entirely bad thing. Analyst Hayden Atkins said, “Markets sold off really heavily yesterday, and  Gold held up pretty well against that. It is maybe the one thing that has really stayed solid against some pretty solid headwinds elsewhere.” Meanwhile the issues facing the euro have actually helped Gold in the eurozone, as evidenced by Commerzbank’s note to investors: “Thanks to the euro’s depreciation vis a vis the U.S. dollar, Gold in euro terms has been making gains for some time now. Since mid-May, an upswing has become evident, which in the current market environment should take the yellow metal on a further upward trajectory.”

Meanwhile,  Moody’s downgraded a few of the remaining AAA rated countries in the eurozone. Those countries are Germany, the Netherlands and Luxembourg. These are basically the main countries that would provide assistance to other countries in the region that could need financial assistance. The service released a statement saying, “Moody’s now has negative outlooks on those AAA-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support — whether because of the need to expand the European Stability Mechanism (ESM) or the need to develop more ad hoc forms of liquidity support.”

U.S. Treasury Secretary Timothy Geithner already has begun speaking toward the potential outcome of kicking the can down the road with the current fiscal situation. In an interview yesterday he said, “Many people who look at this say that, yes,  you’d at least get a recession out of this. The cumulative size of those cuts -- tax increases and spending cuts -- are very, very large relative to the economy.” He also warned that any governmental failure could be quite damaging, relating it to the negative effect of the downgrade of the United States’ credit rating last year over debt ceiling talks. He said, “You saw huge damage to consumer confidence, to business confidence, and to confidence around the world in the United States because you had people in public office threatening to default on our nation's obligations.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,579.90, Up $1.00.
• Silver, $27.06, Down $0.08.

Precious Metals remained volatile throughout the day’s market activity, primarily due to the rehash of the eurozone debt crisis afflicting Spain and Greece. The International Monetary Fund has stepped up efforts to get Greece back on track with a conference set for Tuesday. Precious Metals continue to hold at technical levels despite the concerns. Commodities broker Phillip Streible said, “When Gold gets down to a certain range around $1,550 (to $1,5)60, investors often consider it a safety play and  an inexpensive hedge in their portfolios. … Plus, a lot of people think that weaker global cues are going to entice the Fed to embark on another quantitative easing plan, so Gold’s downside is somewhat limited.”

Stock markets closed off the lows of the morning. Stocks were cautious ahead of mediocre earnings and fears of Spain needing a national bailout. Speaking of Spain’s effect, portfolio manager Eric Green said, “The selloff this morning was overdone, and obviously the market felt that way too. … Nothing incrementally negative came out, but obviously we’re still worried about the situation there.” A number of Spanish regions are looking to government funding to keep their finances afloat. That news alone led to a 1 percent drop in the S& P today.

At 4 p.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,577.40, Down $6.90.
• Silver, $27.06, Down $0.34.

Renewed worries of a deepening eurozone debt crisis have  sent the euro to a two year low  against the American dollar, and Precious Metals are following the former downward. Jeremy Stretch of CIBC said, “What began as a Spanish banking bailout looks to be moving rather quickly towards a possible sovereign bailout. Overlay that with increasingly negative news on Greece, and you get a fairly negative mix, so the path of least resistance for the euro is down.” Spanish bond yields rose to the highest levels in the history of the euro.

The bad news out of Greece comes from reports that the International Monetary Fund (IMF) will  no longer provide additional financing for the country. Greece could be broke by September if it does not receive additional aid from the IMF. The problem is Greece not being able to (or simply refusing to) meet goals set by “the Troika” in order to receive aid. German Finance Minister Wolfgang Schaeuble said, “If there were delays, Greece must make up for them.”

Economist Nouriel Roubini, whose nickname is “Dr. Doom,” believes that the United States economy is still on a downward slope. After saying that  rosy forecasts by economists are out of line, Roubini said, “In 2013 … as some tax cuts are allowed to expire, disposable income growth and consumption growth will slow. The U.S. will then face not only the direct effects of a fiscal drag, but also its indirect effect on private spending.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,569.30, Down $15.20.
• Silver, $26.86, Down $0.53.

Precious Metals prices have deflated since Federal Reserve Chairman Ben Bernanke’s testimony earlier this week, but metals remain poised for the  first overall weekly increase in about a month. Physical demand for Gold is still depressed by India’s currency issues and a weakening ETF market, as well. Analyst David Wilson said, “Given the collapse of the rupee, Gold prices in India are still close to record highs, which is killing the jewelry market at the moment. … Physical investor demand, when you look at ETFs, is not positive, so you would need speculative demand to be making up the difference, and it’s not. That’s related to the issue of growing skepticism over whether there will be U.S. QE (quantitative easing).”

Meanwhile, a Spanish bank bailout has been agreed to pending the actual bank audit to see just how bad the property loan situation is. Luxembourg Finance Minister Luc Frieden said, “We have formalized what we discussed in the past two euro group meetings. We have formally approved the memorandum that lays out the conditions under which Spain can be lent money for the recapitalization of its banks. … The approval of all 17 ministers is there, and  that means that the program can continue. Money will not flow immediately, because work on the analysis of the specific banks is ongoing.” The audit is expected to be completed by mid September.

Meanwhile, concerns continue to mount over the correct response to the escalating violence in Syria following Russia and China’s veto of the United Nations proposal. The swirling rumors that President Bashar al Assad has agreed to give up power are being shot down. The clamor for military assistance is not there the same way it was in Libya, either. The overall feeling is that “the regime is going through its last days,” rebel leaders said.

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,578.80, Down $3.20.
• Silver, $26.98, Down $0.33.