Eurozone debt worries and weak U.S. home prices and consumer confidence took a toll
Gold and silver were heading downward again Tuesday morning on eurozone debt worries and weak reports on U.S. home prices and consumer confidence. The Chinese government, however, announced its own version of a “cash-for-clunkers” program to stimulate car sales.
Spot gold was down 0.89%, bid at $1,559.70 an ounce as of 11:58 a.m. Prices reached as high as $1,583.90 and dropped as low as $1,553.60, according to Kitco market data. The London afternoon reference price was set at $1,579.50, $10 an ounce above Friday’s afternoon reference price.
Spot silver was showing a 1.44% loss, bid at $28.02 an ounce. The morning high as of time of writing was $28.81, with the low reaching $27.76. Tuesday’s reference price was set at $28.25, one-cent-an-ounce higher than Friday’s price fix.
All three components of the S&P/Case Shiller home price index hit new post-crisis lows in Q1, though prices were up in March and February, the first gains in seven months. Home prices were down 2% on average nationally. That compares to a 3.9% decline in Q4 2011.
Consumer confidence dropped, hitting a five-month low in May. The Conference Board reported that its overall index of consumer sentiment fell to 64.0 in May from 68.7 in April. Economists had expected it to increase to 69.4.
Spain’s retail sales collapsed in April, falling 9.8%, the largest decrease since records began in 2003. Meanwhile, the Spanish government aims to tap capital markets by issuing new bonds, the proceeds of which will go toward shoring up Bankia and Spain’s ailing banks. Spanish banks will need to refinance some 98 billion euros of 117.5 billion (~$125.44 billion) in maturing debt this year.
Yields on 10-year German government bonds continued to decline, dropping as much as two basis points, to 1.346% in European trading, while was rebounding from its recent sharp decline.
A second large earthquake struck Italy’s northern Emiligia-Romagna region today, the second in less than two weeks. Ten people have been reported dead, while thousands are living in tents.
The U.S. Federal Reserve Bank is prepared and well-equipped to deal with fallout from Europe’s escalating debt crisis, Federal Reserve Bank of Philadelphia chairman Charles Plosser said in a WSJ interview.
Gold bullion rallied, then fell for a second consecutive trading session in London Tuesday morning and was trading around $1,573 an ounce as of lunchtime, BullionVault reported.
“We still believe that gold has become increasingly undervalued,” BullionVault quoted a note from South Africa’s Standard Bank, which tagged $1,640 as “fair value.”
“Gold looks like the healthiest metal currently,” added Mitsui’s David Jollie, “but new drivers may be needed to encourage the price back above $1,600 and reinvigorate the rest of the precious metals.”
Gold and silver trusts were showing morning losses Tuesday.
