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Gold & Silver Precious Metals Report - July 18

|Includes: GLD, iShares Silver Trust ETF (SLV)

Cache Metals Exclusive Precious Metals Report: July 18

Another lackluster day on the metals as both gold and silver traded lower on Big Ben's second day of testimony before the House Financial Services Committee.

The yellow metal traded lower to $1568 and Fed Chairman Ben Bernanke still gave no hints of any forthcoming QE3. He did state that the central bank is willing to launch new stimulus programmes to jump-start the economy should conditions deteriorate further, but never gave a specific time or period of when they would feel to launch that.

U.S data was slightly better as industrial production rebounded by 0.4% in June after a revised 0.2% drop in the previous month while capacity utilisation increased to 78.9% from 78.7%. Housing starts jumped 6.9% in June to an adjusted annual rate of 760,000 units. This slightly beat the forecast for 740,000 starts and was the highest rate since October 2008. But building permits dropped to 0.76 million from 0.78 million.

"The dollar strength follows better-than-expected industrial production data out of the US yesterday and no comments by Mr Bernanke
yesterday on possible further QE. However, despite the fact that metals have sold-off, they remain within the recent well-established trading ranges."
said Standard Bank in its daily note.

The Eurozone situation still continues to fester as the euro dollar sank against the green back after German Chancellor Angela Merkel said in an interview that she was not certain the European project would be successful, but maintained that she was very optimistic in spite of the current difficulties. Earlier in the day, Germany auctioned more than 4 billion euro dollars of two-year government bonds at negative yields for the first time at this type of auction, reflecting sustained investor concerns over the debt crisis in the region.

The spot gold market remains in a well defined channel and not much is expected to change this unless some earth shattering news in released. A break below $1550 or $1522 will yield a much deeper correction. A break above and close over $1640 will push the metal to $1700 very quickly.

Spot silver followed gold's path trading below $27.00 for the second straight day, but again bargain hunters pushed it back above $27.00. The PGM's remain under pressure as well with spot platinum trading to $1402 while sister metal palladium can't seem to catch a break trading to $575.

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