GOLD PRICES UP FOR SECOND STRAIGHT DAY

As day two of the week comes to an end, the price of Gold has increased for the second day in a row. There has been quite a bit of news out of Europe that has investors leery of economic uncertainty, and with that came an increased value in the Gold market. The main focus has been on the small nation of Cyprus and a proposed bailout from the European Union’s central bank. The easing proposed yesterday was met with much resistance by the government of Cyprus. “At this point in time, we are saying [to international lenders] that if you think that by doing this you are fixing things, by actually destroying our economy and one of the biggest and strongest financial sectors we had on this island, then we have to say ‘no’,” said Efi Xanthou, international relations secretary of the Cyprus Green Party. With the ECB and the Cyprus government at odds, many experts believe this maybe the first of many conflicts in the region.

In the United States all eyes are on the Federal Reserve meetings happening this week. The Fed chairman Ben Bernanke has a plan to make sure nobody jumps to conclusions before the meeting notes are released. Bernanke wants to stop the whispers implying a reduction of the Fed’s easing program because he believes it could weaken the recovery efforts. “Bernanke rightly views it as imperative to get out in front of any movement to quickly pull away from stimulus, and to signal that to markets,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore. Only time will tell if the chairman can get investors to quit jumping to conclusions before the Fed releases their plans.

At 5:00 pm (EDT), the APMEX precious metals spot prices were:

• Gold, $1614.40, Up $7.30.
• Silver, $28.96, Up $0.02.

FOMC BEGINS TODAY CYPRUS TAX VOTE EXPECTED

Precious Metals are mostly flat this morning with Gold and Silver taking a slight lean to the downside. The latest policy meeting of the Federal Open Market Committee begins today. HSBC said in a note, “(We) expect the FOMC to reaffirm its commitment to the current quantitative easing policy and to offer no hint that it will alter the policy in the near term … Uncertainties surrounding the potential withdraw of QE contributed to Gold's sell-off earlier this year. Given this, clarity on the FOMC's QE exit strategy may help ease such concerns and lend support to Gold.”

The eurozone’s bailout of Cyprus, and the peculiar extenuating circumstances surrounding it, pushed the Gold price above the $1,600 mark over the weekend. The Cyprus legislature’s vote on the key piece of the bailout, the tax on bank deposits, was postponed and should take place today (unless it is postponed again). If the tax levy does not pass, the country will not receive its bailout, and default will loom. Some are even speculating that such a result could start a chain reaction with much larger consequences on the eurozone as a whole.

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

• Gold, $1,604.80, Down $2.30.
• Silver, $28.83, Down $0.11.