U.S. stock futures are heading lower  this morning, as precious metals prices remain steady. Investors have experienced some strong gains in the past several weeks, and it could be they need to take a breather.

Bill Gross, chief executive of PIMCO, the world’s largest bond fund, is forecasting for 2012 another round or two of  quantitative easing, muted economic growth and the end of a 30-year bull run in government bonds. Gross points out that long-term interest rates have been rising in recent weeks as a result of increased concerns about inflation and the ending of Operation Twist in several months. Inflation is seen in rising oil and commodity prices. The Consumer price Index has risen 2.9 percent in the past 12 months. Operation Twist was a Fed plan where short-term debt was sold to buy long-term debt. The question on Gross’ mind is that when the Fed quits propping up long-term debt, who will be left to buy?

The New York Mercantile Exchange weekly oil chart has developed a technical pattern (head and shoulders) that would indicate  oil prices will continue to rise. The next price target is set at $125.

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

• Gold - $1,658.40 – Up $1.10.
• Silver - $32.56 – Down $0.08.

Precious metals prices remained relatively steady in afternoon trading. Technical selling to balance portfolios after a week of rising oil prices, the dollar’s decline in value and better than expected consumer prices  pushed investors towards selling  their positions to cover shortcomings throughout the week. These concerns and issues generally tend to point towards inflationary concerns. Treasury Secretary Timothy Geithner said, “We still face a dangerous and uncertain world” when it comes to oil prices, because there is not an easy fix to solving the gasoline issue for domestic consumers.

Saudi Arabia is looking to become a resource that the U.S. will turn to in terms of covering any potential oil shortage in production from the U.S. There seems to be concern over a seasonal impact to production that is contributing to U.S. shortcomings with oil production facilities in the Gulf of Mexico just starting to come on-line following the winter season. Saudi oil production has been on the rise with two key refineries boosting their production to cover global concerns. The Iranian stand-off has pushed some Middle East countries to push Saudi Arabia to increase oil prices, but  Saudi Arabia is standing beside the U.S.  According to Amy Jaffe, energy policy expert for Rice University, “Beyond the expansion at Motiva, there has been a major public shift by the Saudis since the Iran tensions started to raise the price of oil… Saudi Arabia and the United States are trying to show the Iranians they (the Iranians) will have little flexibility, and they shouldn't count on the world needing all the oil that Iran produces.”

At 4:15 p.m. (CDT) – the APMEX precious metals spot prices were:

• Gold - $1,662.00 – Up $1.00.
• Silver - $32.63 – Down $0.14.

The Gold price was still down at midday trading on a one-two punch of increased duties on bullion in India and continued upbeat U.S. economic data. India’s Finance Minister Pranab Mukherjee  unveiled India’s 2012-13 budget today, which called for an increase in taxes on Gold. This would mark the second time India has increased taxes on precious metals imports this year. Mukherjee indicated that India’s current account deficit is linked to the nearly 50 percent increase in precious metals imports. India has been a cornerstone of the bullion market, importing a record 969 metric tons last year alone. Climbing Treasury yields and the continued increase in the strength of the dollar also are  adding to the downward pressure on Gold. Increasingly positive data indicates the U.S. economy may be healthier than expected.

Oil has moved back above $124 a barrel in response to  restricted Iranian imports  and reduced capacity. “Spare capacity is really very tight, and any natural disaster or problem in the Middle East could be a real problem,” said Rob Montefusco at Sucden Financial. The tight rules on Iran are even disrupting oil shipments to Asia, and many Eastern oil purchasers are calling on Western officials to revise sanctions. Any news on economic sanctions is viewed as isolating Iran, but domestically the rising prices at the gas pump continue to be of great concern to U.S. consumers. The rising gasoline prices could derail any good economic news or recovery.

German Chancellor Angela Merkel has said that a  decision on reinforcing the firewall  that is the euro area’s financial backstop will be made by the International Monetary Fund in a meeting next month. Merkel has indicated there are discussions about “combination possibilities” for the rescue funds ahead of the meeting in Copenhagen. There are concerns among finance ministers on what to do with the temporary European Financial Stability Facility, which manages rescue programs for Ireland, Portugal and Greece, and its permanent successor, the European Stability Mechanism. “What’s clear is that we need to settle on a position with a view to the IMF’s spring meeting, because the topic will surely come up, and because there have been offers by the international community” to boost the IMF’s anti-crisis resources, Merkel told reporters in Munich today. “You can count on us setting the course by the end of March.”

At noon (CDT), the APMEX precious metals spot prices were:

• Gold - $1,656.40 – Down $4.60.
• Silver - $32.63 – Down $0.14.

Precious metals prices moved lower in overnight trading, and remained so  after the latest consumer price index (CPI) report was released. Forecasters expected the CPI would rise about 0.5 percent, and the number came in at 0.4 percent. Core CPI (which strips out food and energy costs) rose just 0.1 percent. U.S. stock futures added to gains after the release. Much of the movement in the Gold price lately has been a result of the Federal Reserve meeting this past Tuesday.

Geopolitical tension remains a key concern around the world. In Syria,  45 more residents were killed  as government forces pressed an offensive that also drove more than 1,000 refugees into Turkey. North Korea announced  it will launch a rocket carrying a satellite next month, raising concerns from the United States and other nations. U.S. Secretary of State Hillary Clinton said she believes such a launch would breach a U.N. resolution. Experts suggested this launch will be another long-range missile test, which the country claimed it would halt as part of ongoing talks with the U.S.

An CNBC article is asking this question: “Who is doing all the buying in the stock market?” The author points out that metrics used to gauge behavior by investors point toward money leaving the market, with those involved unsure of what the future holds. Charles Biderman, chief executive at TrimTabs, said, “Demographics and poor longer-term stock market returns probably play a role (in investor caution). But we also think that all the volatility and central bank interventions in financial markets are leading more investors to question how stable the financial system really is.” One investment that historically has played a role of stability in an otherwise-unstable financial market is Gold, and it also has performed well when central banks intervene in the market.

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

• Gold - $1,647.50 – Down $13.50.
• Silver - $32.46 – Down $0.31.

The Gold price has continued to climb since the  Mid-Day Gold & Silver Market Report. Prices have trended downward this week as investors sold off Gold in response to Federal Reserve meeting Tuesday. However, the metal bounced back today as a result of purchases by bargain hunters, which some analysts think could continue to provide support for higher prices. According to Jeff Wright, a precious metals analyst with Global Hunter Securities, the Gold market is “finding support from both physical purchasing and interest at the ETF level.” Although Gold has seen a pullback recently, Wright said, “In the longer term,  Gold is expected to continue rising  with continued negative real interest rates, initial signs of inflation and gradual weakening of the U.S. dollar.” Prices for Silver, Platinum, and Palladium were up in afternoon trading, as well.

“Inaccurate” is the term the White House is using to  describe a report released earlier in the dayindicating Britain and the United States had agreed on a joint release of government-controlled oil reserves. Despite this, oil prices, which dropped by $1 per barrel on the earlier report, stayed flat after the White House update. Meanwhile, there was a major development in the West’s ongoing conflict with Iran over that country’s nuclear program, as the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced today that it was severing ties with banks in Iran. Although sales of oil by Iran to other countries will continue, the loss of SWIFT will make it harder for Iran to get paid for that oil. Stephen Schork, an independent oil analyst and trader, said, “They’re going to sell because they have to. Whether they get paid through SWIFT or with barges filled with Gold, they’re going to do it.”

At 4:09 p.m. (CDT), the APMEX precious metals spot prices were:

• Gold - $1,659.10 – Up $14.70.
• Silver - $32.54 - Up $0.32.

Gold has continued to hold onto modest opening gains, as the drop from previous sessions is attracting bargain hunters. The metal may be vulnerable to more selling, if easing expectations continue to fade and the dollar continues to strengthen. In a note to its investors, Commerzbank wrote, “As the price falls below important support levels, we may see further selling on the part of money managers. We regard this development as positive for the Gold price in the medium term, because the exit of ‘weak hands’ paves the way for the next price rise.” William Adams, at metals-data provider FastMarkets, supported that position, saying, “There is a risk of further weakness, but equally we would not be surprised if bargain hunters start to provide support. And if prices start to move higher, then follow-through buying may well follow.” 

In an effort to fight rising domestic gasoline prices, Britain has decided to cooperate with the United States in a  release of strategic oil stocks. “We regularly consult with the British on energy issues, and any discussion that we had was in that context. We will continue to monitor the situation and consult with them and others,” said an official in the Obama administration. Rising oil prices have begun to have a global effect, and they are hitting U.S. citizens especially hard at the gas pump. Those increases are causing preliminary fears of upsetting the fragile global economic recovery.

National Mining Corp. has announced that it has found Gold deposits in southern Ethiopia that may produce at least  10 metric tons a year, which would nearly double its national output. National Mining’s Chief Executive Melaku Beza said the Okote site in Ethiopia’s Oromia region has more than 550 tons of Gold, of which 73 tons may be ready for extraction within 24 months. The company, which is closely held by Saudi Arabian billionaire Mohammed al-Amoudi, plans to invest $150 million in the initial phase of production. This is certainly a nice Gold find from a supply perspective, but it will obviously take time to refine and make its way into the market.

At noon (CST), the APMEX precious metals spot prices were:

• Gold - $1,658.20 – Up $13.80.
• Silver - $32.61 – Up $0.39.