Gold & Silver Daily Market Recap: July 13th, 2012

Precious metals across the board rallied on renewed hope of QE3 as poor Chinese data and  a Moody's downgraded of Italian debt by two notches today would lead to further stimulus.

Spot gold took flight trading to $1597 as investors once again believed that QE3 was just around the corner.  The yellow metal saw hedge funds cover shorts as the metal couldn't break $1550 on the downside. The JP Morgan trading debacle also gave investors a reason to seek safety in the metals. The bank has now raised their trading loss to $4.4 billion, Chase posted a $4.96 billion second-quarter profit, down 8.7 percent from $5.43 billion a year ago but still in the black even with the $4.4 billion trading loss at its chief investment office.

The Euro dollar found support an rallied to 1.2240 amid reports that the European Central Bank could implement a negative deposit rates to fight the current recession. This contributed to the jump in gold prices above $1580.

In China the GDP grew at a 7.6% in the second quarter of 2012, closely matching expectations of the government’s 8.1% target for the full year. It was also the nation's slowest growth rate since early 2009.

"Prospects of a Chinese stimulus response (owing to the weak Chinese data flow overnight) have seen precious metals respond, like most other commodities, positively. And, given the excessive short positioning in futures markets across the complex, we might be seeing some unwinding as participants grow anxious of holding these positions over the weekend"
said Standard bank in its daily note

A quiet day for U.S data flow with Consumer confidence in the US dipping to a 2 year low, coming in at 72.0, below the expected number of 73.5. Stock markets rallied in line with metals as stronger earnings from JPMorgan Chase and other big banks launched a stock market rally.

Spot silver enjoyed its best week in a few months out doing its bigger brother gold. the metal touched $27.60 after flirting with long term uptrend support of $26.00. A re-test of the lower levels is still in the cards.

July 13th Closing Prices