Precious metals prices were down this morning, driven primarily over the growing economic concern over the debt resolution steps being taken in Greece, causing the euro’s value to drop. Oil prices are on the rise as well, due to Middle East instability, but safe-haven appeal of precious metals is being influenced by exchange rate issues this morning. Analyst David Wilson said,  “Gold this year has been driven by exchange rate mechanisms. … At some point, if confidence over Europe evaporates, you would think that should be positive for Gold, but you still have to keep an eye on the dollar-Gold trade-off.”

President Barack Obama and Israeli Prime Minister Benjamin Netanyahu met in Washington on Monday. Some agreements emerged, but Netanyahu did not agree to hold off possible military strikes against Iran, even though such a decision has not been made. The two leaders did agree to see how financial sanctions would work against Iran. Obama said that the U.S. “has Israel’s back.” However, Netanyahu took a more forceful tone, saying, “None of us can afford to wait much longer. As prime minister of Israel, I will never let my people live in the shadow of annihilation.” Some analysts, like Marc Faber, view military conflict as an almost foregone conclusion. He said, “Political risk was high six months ago and is higher now. I think sooner or later, the U.S. or Israel will strike Iran — it’s almost inevitable. … Say war breaks out in the Middle East or anywhere else Mr. Bernanke will just print even more money — they have no option. … They haven't got the money to finance a war. …  You have to be in precious metals  and equities. … Most wars and most social unrest haven’t destroyed corporations they usually survive. … If you can’t live with volatility, stay in bed.”

Greek private creditors basically have until Thursday night to agree to the  bond swap initiative to put Greece on more stable financial ground. If the plan is not agreed to, it could kick in collective action clauses (CACs), which basically requires creditors holding 90 percent or more of the debt to take the swap, effectively getting their haircut. If less than 75 percent of the private creditors do not agree to the swap, then the CACs would kick in. Analyst Gary Jenkins said, “Obviously the report is written on a worst-case basis to try and encourage participation in the exchange. … The most likely outcome may well be that Greece passes its 75 percent target and then uses CACs to ensnare the remainder.”

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

• Gold - $1,679.90 – Down $24.80.
• Silver - $33.02 – Down $0.71

Since the Mid-Day Gold & Silver Market Report, the price of Gold climbed  to end the day above $1,700. Markets across the board have been weighed down by depressing data released in the U.S., as well as from China and Europe. The Gold price fell sharply last week in response to testimony by Federal Reserve Chairman Ben Bernanke before Congress, in which he did not give indications that the Fed was considering another round of quantitative easing. However, in a note to clients, analysts with Commerzbank stated that although there is “additional scope for correction” in precious metals prices, such correction would likely be temporary. Many analysts and economists have predicted that Gold is on track to reach prices above $1,800 before summer.

Stocks in the U.S. dropped today, responding to news out of China that it had lowered its economic growth target, as well as to news in the U.S. that there was a decrease in orders to factories (the first such decrease in three months). After advancing for three weeks straight, the S& P 500 index fell 0.4 percent. The Dow Jones Industrial Average and the Nasdaq saw similar declines. Responding to the drop in stocks, David Joy, a chief market strategist with Ameriprise Financial Inc., said, “It’s wise to take a little money off the table. Some of the easy gains have already been made. We’re back to focusing on the economic fundamentals. China saying that they are targeting 7.5 percent growth raises concern of a hard landing.” Another analyst pointed to a decline in the Citigroup Economic Surprise Index for the U.S. as a cause for concern in the market.

A selection of charts taken from Pricedingold.com provides an entertaining look at what the  prices would be in Gold for some everyday goods and services. Included among the charts, the value of the U.S. dollar when priced in Gold (with the dollar showing a significant decline over the past few decades), home prices compared to the Gold price, and the U.S. Gross Domestic Product represented in grams of Gold. Some more whimsical charts show the cost for first-class postage priced in Gold, the price of coffee in milligrams of Gold per pound, and the price for a pound of uranium in grams of Gold.

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

• Gold - $1,707.20 – Down $3.10.
• Silver - $34.04 - Down $0.50.

Gold and Silver prices have been relatively stable in morning trading. Gold did dip below $1,700 before rebounding. Platinum and Palladium have taken sharper hits to their prices. Generally speaking, this lack of price movement occurs on days when there is a void of news affecting Gold and Silver. This was true this morning. Greece and oil remain the top headlines. The popular notion that a solution has been finalized to deal with Greek debt is not correct. In fact, this is a very important week because it is time for the  private bondholders  to decide to what extent they will participate in the debt swap, if at all. Greece must get 75 percent of these bondholders to agree so as to avoid kicking in credit-default swaps. If this does not go through, Greece is again looking at the possibility of default.

HSBC Chief Economist Stephen King said  rising oil prices  are beginning to overtake Greece as the greatest reason for investor anxiety. If we see prices start to approach what was experienced in 2008, it would greatly threaten the global economy. The U.S. experienced an extended period of stagflation in the early 1970s as a direct result of higher oil prices.

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

• Gold - $1,705.80 – Down $4.50.
• Silver - $34.62 – Up $0.08.

• Gold - $1,712.90 – Down $9.80.
• Silver - $34.80 – Down $0.88

Gold and Silver are giving back yesterday’s gains this morning, while U.S. stock futures trade lower. A strengthening U.S. dollar is the likely cause of Gold and Silver’s decline, as currency markets have recently been the controlling factor in the prices of the metals. One analyst, James Steel, believes thatthe buying opportunity for Gold may not be over yet. He said, “The rather modest bounce in Gold prices implies that the sell-off might not be over.” He added that in the longer term, “monetary policy is still highly accommodative, and we believe this will eventually support the Gold price.”

An election in Iran  highlighted growing tensions between that country and Western nations. Supreme Leader Ayatollah Ali Khamenei called on his country’s citizens to vote, as he said, “The arrogant powers are bullying us to maintain their prestige.” U.S. President Barack Obama is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu in the coming days. Israel has been very outspoken about their willingness to use military force to prevent Iran from continuing its nuclear program, and Obama is worried that such an attack may be premature if or when it happens.

25 of the 27 European Union countries  signed a fiscal pact  which states that all countries are to write a golden rule regarding balanced budgets and to put those into constitutions or laws. European Council President Herman Van Rompuy said that the agreement “helps prevent a repetition of the sovereign debt crisis.” However, that raises a question: Doesn’t the crisis have to be over before a repetition can occur?

At 8:02 a.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,713.50 – Down $9.10.
• Silver - $35.03 – Down $0.66.

Prices for all four precious metals ended the day up in afternoon trading, with Silver and Platinum in particular both continuing to gain since the posting of the  Mid-Day Gold & Silver Market Report. The Gold price has seen a slight drop since noon, although it still ended the day in positive territory, while Palladium has stayed relatively flat. Yesterday’s downward movement in precious metals came in response to Federal Reserve Chairman Ben Bernanke’s testimony before a congressional committee in which he gave no indication that a third round of quantitative easing is under consideration by the Fed. Julian Jessop of independent macroeconomic research consultancy Capital Economics called the movement by the metals overdone and said that he feels the appeal of Gold will make up for the unlikelihood of a QE3. Referring to that appeal, Jessop said, “It is the risk of a renewed escalation of the eurozone crisis that underpins our forecasts.” Analysts with bullion broker Sharps Pixley in London suggested that yesterday’s Gold pullback could be a window of opportunity for investors looking to get into Gold, saying in a note to clients, “The long-term Gold story remains unchanged.”

In a report prepared for the so-called Group of 20 nations, the International Monetary Fund (IMF) stated that  economic hazards in Europe still threaten the recovery of the world economy. The report described the global economy as facing “major downside risks.” Based on the IMF’s report, the forecast for the eurozone’s economy is that it will undergo a 0.5 percent contraction in 2012. Additionally, economic expansion worldwide will experience a slowdown from last year’s rate of 3.8 percent to a rate of 3.3 percent this year. According to the report, “The overarching risk remains an intensified global ‘paradox of thrift’ as households, firms, and governments around the world reduce demand. This risk is further exacerbated by fragile financial systems, high public deficits and debt, and already-low interest rates.” The report also stated that policy-makers in the United States have yet to make any progress toward a “credible medium-term fiscal adjustment plan.”

At 4:13 p.m. (CST), the APMEX precious metals spot prices were:

• Gold - $1,719.60 – Up $7.80.
• Silver - $35.58 - Up $0.92.

Precious metals prices have rebounded slightly from yesterday’s volatility. The gold market was largely influenced by the perception presented in prior remarks by Fed Chairman Bernanke, but were almost roundly squelched in prepared statements before the House of Representatives yesterday. Today he is scheduled to sit in front of the Senate. Standard Bank’s Walter de Wet echoed that sentiment, having said, “We had a sense that the  gold market was increasingly pricing in QE3, and obviously Bernanke has put a dampener on that.” However the drop in prices really pushed physical sales of the metal, with some dealers saying, “It's been a long time since we (saw) such decent buying.”

In his speech before the House yesterday, there was a lot of cautious optimism surrounding comments made by Chairman Bernanke. Although there are “positive developments” in the job market it is still “far from normal.” He also mentioned that any impact of higher gas prices would most likely be temporary. He also said, “Monetary policy is not a panacea… It can help offset cyclical fluctuations and financial crises like we’ve had, but the long-term health of the economy depends mostly on decisions taken by the Congress and the administration.” Time to look forward to today’s message and economist Eric Green probably says it best, “The nice thing about this is  he always has a chance to refine his message  on the second day.”

The global economy stands on a precipice of uncertainty surrounding oil. A U.S. advisory body has found that  trade sanctions against Iran are already having an impact  before they officially go into effect. There are already talks of shortages in supply, which will just drive the price up even higher. The biggest customers of Iranian oil China, Japan and India are entangled with the U.S.-led sanctions. Another key issue is the OPEC supply is fulfilled by Iran. They are the second largest OPEC producer behind Saudi Arabia, so any additional supply is going to be very limited. Former State Department adviser Trevor House affirmed that sentiment when he said, “With oil inventories and spare OPEC production capacity running low, consumers don't have much buffer against additional disruptions in supply… That means the needle the administration has to thread to pressure Iran without raising oil prices has gotten even smaller.”

At 8:00 a.m. (CST) – the APMEX precious metals spot prices were:

• Gold - $1,705.70 – Up $8.60.
• Silver - $34.68 – Even