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April 3, 2013

Release Date: 
Wednesday, April 3, 2013

Today’s financial markets along with the dollar fell as investors digested troubling financial news. Gold and silver prices were lower, largely on technical selling. Stocks fell to a five week low driven by disappointing labor data. You can view the most recent precious metals and stock index prices here.

Despite the drop in gold prices, MarketWatch reports that “[p]hysical buying remains strong…’demand for the metals in the physical form is there — as highlighted by reports that Turkey’s imports of silver surged more than 30% and that of gold climbed to an eight-month high in March’….” (“Gold drops to lowest settlement since June,” MarketWatch, 4/3/13.)

The managing director of American Precious Metals Advisors believes the long term gold bull market remains intact despite the recent consolidation. ““I can also tell you that central bank reserve managers are not worried their gold assets will depreciate…but many are, most definitely, worried about the prospective depreciation in the value of their U.S. dollar holdings…and this, too, will continue to underpin the price…” (Market Nuggets: Nichols: Gold Short-Term Outlook Uncertain; Long-Term Bull Market Intact,” Kitco News, 4/3/13.)

ADP and Moody's Analytics reported a monthly increase of 158,000 U.S. jobs, well below the projected 192,000 jobs. The markets now await Friday's employment report from the Bureau of Labor Statistics. (“Stocks Pull Back,” WSJ, 4/3/13.)

Euro zone unemployment rose to a record high in February, rising to 12%. Additionally, manufacturing fell in March at its fastest rate in three months. The European Central Bank will hold its monthly policy meeting this week where this dismissal data along with the recent Cyprus bailout will likely be at the forefront of discussions. Although analysts expect the finance ministers to leave interest rates at the 0.75, the ECB may cut rates in the second half of 2013 if euro zone economic data continues its downward trend. (“Eurozone Unemployment Unchanged at Record High,” IBT, 4/3/13.)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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