According to the World’s Gold Council’s annual report, the  demand for Gold  reached an all-time high in 2011. This was largely because of increased buying in China, India and Europe. Germany and Switzerland were the leading buyers in Europe. The report states that the reason for the increased demand in that part of the world is related to the European debt crisis driving investors to safe-haven investments.

Another significant Gold-buying event was also covered in this report. Most investors know that in 2010, central banks became net buyers of Gold for the first time in decades. Before 2010, central banks generally sold more Gold than they bought, thus adding to the Gold supply. In 2010, they began competing for the Gold supply. The 2011 Gold purchases by central banks far exceeded even those of 2010. In 2010, central banks bought 77 metric tons of the yellow metal. In 2011, they bought 440 metric tons, an increase of 471%.

Jobless claims fell  last week to near a four-year low. Economists polled by Reuters forecasted claims to be at 365,000 instead, the number came in at 348,000. Although there still are no job openings for nearly three out of four people who are looking, today’s numbers will still be viewed as a sign of a strengthening labor market.

The  core producer price index  had its largest increase in the last six months. This is a measurement of producer prices outside of food and energy. Although there are some who see this as inflationary, others see inflation as unlikely because of the weak labor market.

At 8 a.m. (CST), the APMEX precious metals prices were:

• Gold - $1,712.10 – Down - $15.00.
• Silver - $32.88 – Down $0.58.

Continued uncertainty about Greece’s bailout and tension between Israel and Iran caused investors to turn to the safe haven of Gold today. The precious metal ended the day up by over $10. Prices for Silver and Platinum ended the day up, as well, with only Palladium experiencing a modest drop.Speaking about Greece, Global Hunter Securities precious metals analyst Jeff Wright said, “The time is limited to avoid spreading the eurozone debt crisis from Greece to countries with a larger economic impact, such as Portugal, Spain and Italy most of the efforts have been to contain the crisis.” 

Political leaders in Greece are fighting to salvage the 130 billion-euro financial bailout package pending with the European Union and the International Monetary Fund. However,  sources in the EU reported today  that eurozone finance officials are analyzing whether delaying some or perhaps even all of the bailout package might be possible without experiencing a disorderly default. There are questions as to whether Greece is really committed to the severe austerity measures recently passed in that country’s parliament. Greek leaders have rejected this criticism of the austerity measures, which are extremely unpopular among Greek citizens. Greece’s finance minister accused critics of “playing with fire” and promised that all outstanding issues on the measures would be addressed.

Minutes released today of a January meeting of the Federal Reserve  show that although the Fed is willing to consider another round of easing here in the U.S. in the form of bond purchases, there is division among its members as to if and when. According to the minutes, some officials who are worried about the country’s continued high unemployment favor bond purchases in the near future, while others are of the opinion that such easing should only take place upon further weakening of the economy. At a news conference last month, Fed Chairman Ben Bernanke indicated that the central bank does consider easing in the form of buying bonds an option for stimulating the nation’s economy. Two previous rounds of easing efforts by the Fed (commonly referred to as “quantitative easing”) resulted in increased inflation here in the U.S., a drop in the value of the dollar, and a corresponding rise in the value of Gold.

At 4:03 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,728.60 - Up $11.90.
• Silver - $33.48 – Up $0.09.

Gold and Silver prices rose in overnight trading, and U.S. stock futures are higher after better-than-expected European economic data.    German and French gross domestic product (GDP) numbers beat expectations, though the eurozone’s GDP as a whole contracted by 0.3 percent. Brian Gallagher of Dolmen Stockbrokers said, “Growth is slowing (in the eurozone), but it’s slowing at a slower pace than expected.  Concerns that we risk a severe recession have been decreased by the numbers we saw today.” Precious metals and stock futures jumped even higher after the  release of the Empire State manufacturing index. Surprising economists, the index rose to 19.5 in February, which is the highest level in 20 months.

The eurozone also received a vote of confidence from the Chinese government, as People’s Bank of China Gov. Zhou Xiaochuan announced that China would be expanding investments in the area. Xiaochuan believes that European leaders will be able to solve the debt riddle. Former Treasury Secretary Henry Paulson didn’t rule out the possibility of the eurozone’s troubles being resolved, but he does believe that  it will take years to sort out the debt crisis in the region. He said, “There is similarity (with the financial crisis in the U.S.) in certain regards. This has been going on for a long time, and I think it will take years to play out. … The structural issues around the EU are very difficult issues.”

Geopolitical issues continue in the Middle East, as  Syrian government forces attacked three major cities today. The revolution in Syria has pressed on for 11 months, and the U.N. estimates that “several thousand” civilians have been killed. Government forces are continuing their bombardment of residential neighborhoods in Homs, and also in Hama and Damascus.  Iran has cut oil exports to six European states  in retaliation to sanctions imposed by the European Union. The oil price hit a six-month high on the news. Oil and Gold historically have a positive correlation.

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,732.60 – Up $15.90.
• Silver - $33.85 – Up $0.46.

Since the  Mid-Day Gold & Silver Market Report, precious metals prices have climbed somewhat. Continued uncertainty over Greece’s debt bailout situation has buoyed the dollar, causing a corresponding drop in the price of Gold. However, one precious metals analyst said, “Significant macroeconomic and geopolitical risk and the appalling fiscal state of most major industrial nations means that  Gold  will almost certainly eke out further gains in all currencies in the coming months.” Prices for all four precious metals ended the day slightly down.

Finance ministers in the eurozone are not ready to make a decision on  Greece’s  bailout and will probably delay a meeting originally scheduled for Wednesday to discuss the matter, European officials said. As the details of Greece’s recent budget are scrutinized to verify it does meet the conditions required for monetary aid, one European official indicated that national finance ministry experts do believe they have the information needed to make a decision if the meeting were held tomorrow. However, they will instead wait until the beginning of next week. Even with a positive decision from the eurozone, Greece’s private creditors would still need to approve a separate debt agreement before any final bailout decision is made.

Residents in  Syria  said they believe that their country is headed for an all-out war. As the siege on the city of Homs intensified today, opposition groups said that the Syrian government initiated attacks in other cities throughout the country that left many dead. One opposition activist said, “They are shelling randomly. Why? I don’t know.” The Syrian Observatory for Human Rights also stated that shelling was increased today. Arwa Damon with CNN said, “Everyone we’ve been talking to ... believes that the country is heading toward, or already is in, a full-blown war, and recovering from that is going to be incredibly challenging.”

At 4 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,721.30 - Down $2.60.
• Silver - $33.65 - Down $0.12.

Gold pared some losses this morning after reports on retail sales and import and export prices were released. Retail sales rose,  though not as much as expected, and the government also revised downward the reading for sales in November. Import and export prices both rose, as well, fairly in line with analysts’ expectations, but those prices fell when not considering food and fuels. This supports the Federal Reserve’s view that inflation is largely contained at the moment.

Since the announcement that an austerity and bailout agreement had been reached in the eurozone regarding Greece, the mood has been mostly negative. The initial disappointment was the realization that austerity measures had been agreed to in Greece before, but they were never implemented. Riots in the streets of Athens continue to rage over the planned measures, as the people do not want to give up their lush lifestyles. According to the Financial Times,  European nations, including Germany, may only give conditional approval for a bailout  until they can be convinced that austerity measures will be implemented fully. To add fuel to the fire in the eurozone,  Moody’s downgraded the sovereign debt ratings of six countries, including Spain, Italy, and Portugal. It also downgraded the outlook for Austria, France, and the United Kingdom.

Though recent movement has tracked currency fluctuations, geopolitical tensions remain a key driver for the price of Gold. In Syria,  government forces continue to attack rebels  and civilians in an effort to stop the uprising. The city of Homs has been bombarded by artillery and rocket fire for 11 days, and a humanitarian crisis is brewing. The people are running out of food and fuel, and shops are closing because most residents are not leaving their homes.

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,719.00 – Down $4.90.
• Silver - $33.60 – Down $0.17.