Morning Market Update Dec 6

Downward pressure continues on gold, fueled primarily by futures contracts (paper gold.) Since gold futures outweigh actual physical transactions, their influence is overly large. Evidence that this is a “paper phenomenon” is the fact that central banks are still buying, and gold-backed ETFs are increasing their physical holdings on a daily basis.

The dollar gained slightly on the report that U.S. jobless claims dipped, putting further downward pressure on gold. In Europe, the overall economy of the EU showed continued contraction, and Greek unemployment rose to 26%. To counter that, German manufacturing orders increased, and the ECB did not lower rates, signifying that they believe the economy does not require further measures at this time.

In the U.S. the persisting specter of the fiscal cliff looms as both parties play chicken, with the U.S. economy in the balance. Next week, the Fed Open Market Committee meets, where it is assumed QE4, a new round of quantitative easing and government repurchase of freshly issued Treasury bonds will be announced.

by David Peterson

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