Precious Metals Slip On Lack Of EU Solution

February 10, 2010 – Precious metals slipped today following news that the EU had failed to finalize a plan to bring Greece out of its financial crisis. As the news of a delay spread, the euro dropped and the dollar strengthened, leading to a lower day by precious metals. Gold fell $2.60 to $1,075.30, silver dropped 7 cents to $15.23 and platinum dipped $2.00 to $1,507.00. On the currency front, the US Dollar Index rose to 80.02, up 0.165, while the euro fell on the lack of a Greek bailout.

Precious metal prices also began losing demand support due to the upcoming New Year in China and concerns about tightening monetary policies in both China and the United States. While no definitive policy has come out of China, Federal Reserve Chairman Ben Bernanke confirmed concern over the potential for inflation in the US and assured government leaders that there is a strategy to fight it, including increasing interest rates and reducing the monetary supply.

Many analysts are expecting demand for precious metals to decline for the next week on lower demand, but some are expressing optimism for renewed price increases starting the following week, expecting renewed activity based on a Greek bailout plan and resumed precious metal demand in China.

For investors, this “slow period” could represent a good opportunity to increase precious metal holdings on what looks to be a possible demand-based price drop. Investors should analyze market activity and consider taking positions in metals like gold, silver, platinum and palladium. 

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Danny Burns

Senior Staff Writer - Precious-Metal.org