• Gold - $1,724.20 – Down $3.20.
• Silver - $33.34 – Down $0.10.

Precious metals prices are trading higher this morning thanks to increasing demand, a stronger euro, and inflationary concerns. As mentioned yesterday,  data from the World Gold Council showed that China and India generated 49 percent of demand for Gold as an investment. Marcus Grubb, managing director for investment at the World Gold Council, said, “It is likely that China will emerge as the largest Gold market in the world for the first time in 2012. What is certain is that the long-term fundamentals for Gold remain strong, with a diverse and growing demand base, coupled with constrained supply-side activity.”

The euro was boosted by  fresh hopes of a second bailout for Greece. Finance ministers from the eurozone are set to meet Monday, and leaders from Germany, Italy, and Greece are all optimistic that an agreement will be reached. However, tensions are rising in the region because the leaders have again pushed this problem to a crucial moment. Austrian Finance Minister Maria Fekter said, “The skepticism is especially strong among the triple-A states over whether Greece will be able to make it. The risk of a Greek insolvency is not off the table.”

The  consumer price index was released in the U.S.  this morning, and there is a concern that higher energy costs may hamper economic recovery. Though a large portion of consumers’ paychecks go to food and energy costs, the Federal Reserve does not include those two factors when they consider inflation. However, the core index (not including food and energy) still rose 0.2 percent, which was in line with analysts’ expectations.

At 8 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,733.40 – Up $6.00.
• Silver - $33.58 – Up $0.14.

Gold prices ended the day higher again today,  pushed upward mid-session  by a drop in the dollar, as well as the jump in oil prices brought on by the continued tension between Iran, Israel, and the U.S. “With the euro making a bit of recovery in the midday, Gold is getting support from the possible inflationary effects from the very robust crude oil price trends,” said Richard Hastings, a Global Hunter Securities macro strategist. Hastings said, “Inflation will inevitably bubble up, and this should give Gold its next move significantly higher towards the late spring this year.” Platinum ended the day lower in price, while Silver and Palladium charted gains.

Moody’s Investors Service announced today that  131 financial institutions worldwide could soon receive a credit rating cut. Of the financial institutions facing a rating cut, 114 are spread across Europe. Moody’s explained that any future cuts would be a result of the sovereign debt crisis plaguing the eurozone and a reflection of deteriorating creditworthiness of European governments. The institutions that Moody’s indicated could see a cut in their credit rating include Bank of America, UBS, Morgan Stanley, Goldman Sachs, and Deutsche Bank. Last week, six European nations (including Italy and Spain) had their credit ratings cut by Moody’s. At the same time, the rating service warned France, Austria, and Britain about the possibility that their credit ratings could also see cuts in the near future.

Republicans and Democrats have hammered out a deal to  extend the payroll tax cut  due to expire at the end of February. Although leaders from both parties indicated they would support the deal, many see the agreement as a victory for Democrats, since Republicans did not demand that the tax cut extension be offset by a corresponding reduction in spending, as has been the case during past negotiations. Despite House Speaker John Boehner’s description of the deal as fair, a number of Republicans in Congress are unhappy that this agreement will add $100 billion to this country’s national debt.

At 4 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,729.00 – Up $1.90.
• Silver - $33.55 - Up $0.07.

According to the World’s Gold Council’s annual report, the  demand for Gold  reached an all-time high in 2011. This was largely because of increased buying in China, India and Europe. Germany and Switzerland were the leading buyers in Europe. The report states that the reason for the increased demand in that part of the world is related to the European debt crisis driving investors to safe-haven investments.

Another significant Gold-buying event was also covered in this report. Most investors know that in 2010, central banks became net buyers of Gold for the first time in decades. Before 2010, central banks generally sold more Gold than they bought, thus adding to the Gold supply. In 2010, they began competing for the Gold supply. The 2011 Gold purchases by central banks far exceeded even those of 2010. In 2010, central banks bought 77 metric tons of the yellow metal. In 2011, they bought 440 metric tons, an increase of 471%.

Jobless claims fell  last week to near a four-year low. Economists polled by Reuters forecasted claims to be at 365,000 instead, the number came in at 348,000. Although there still are no job openings for nearly three out of four people who are looking, today’s numbers will still be viewed as a sign of a strengthening labor market.

The  core producer price index  had its largest increase in the last six months. This is a measurement of producer prices outside of food and energy. Although there are some who see this as inflationary, others see inflation as unlikely because of the weak labor market.

At 8 a.m. (CST), the APMEX precious metals prices were:

• Gold - $1,712.10 – Down - $15.00.
• Silver - $32.88 – Down $0.58.

Continued uncertainty about Greece’s bailout and tension between Israel and Iran caused investors to turn to the safe haven of Gold today. The precious metal ended the day up by over $10. Prices for Silver and Platinum ended the day up, as well, with only Palladium experiencing a modest drop.Speaking about Greece, Global Hunter Securities precious metals analyst Jeff Wright said, “The time is limited to avoid spreading the eurozone debt crisis from Greece to countries with a larger economic impact, such as Portugal, Spain and Italy most of the efforts have been to contain the crisis.” 

Political leaders in Greece are fighting to salvage the 130 billion-euro financial bailout package pending with the European Union and the International Monetary Fund. However,  sources in the EU reported today  that eurozone finance officials are analyzing whether delaying some or perhaps even all of the bailout package might be possible without experiencing a disorderly default. There are questions as to whether Greece is really committed to the severe austerity measures recently passed in that country’s parliament. Greek leaders have rejected this criticism of the austerity measures, which are extremely unpopular among Greek citizens. Greece’s finance minister accused critics of “playing with fire” and promised that all outstanding issues on the measures would be addressed.

Minutes released today of a January meeting of the Federal Reserve  show that although the Fed is willing to consider another round of easing here in the U.S. in the form of bond purchases, there is division among its members as to if and when. According to the minutes, some officials who are worried about the country’s continued high unemployment favor bond purchases in the near future, while others are of the opinion that such easing should only take place upon further weakening of the economy. At a news conference last month, Fed Chairman Ben Bernanke indicated that the central bank does consider easing in the form of buying bonds an option for stimulating the nation’s economy. Two previous rounds of easing efforts by the Fed (commonly referred to as “quantitative easing”) resulted in increased inflation here in the U.S., a drop in the value of the dollar, and a corresponding rise in the value of Gold.

At 4:03 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,728.60 - Up $11.90.
• Silver - $33.48 – Up $0.09.