Investors have their eye on Europe as there are signs of returning political turmoil. Spanish government bonds rose as Spain’s prime minister is working to contain a corruption scandal. Later this month, Italy will have a general election, and investors will watch the actions of that new government. There is concern the next government will change economic measures already in place.  Jim Reid, strategist at Deutsche Bank in London, said, “The weekend news flow served as a timely reminder of the political risks looming on the European horizon.”

The Gold price is trading in a tight range currently, but Harry Colvin, director and senior economist at Longview Economics, said in a recent interview with CNBC that  “Everyone is always bearish at the lows, that’s the time to buy it, we’re going to get a good rally this year I think.”  He feels that Gold is poised for a good rally, regardless of inflation. Colvin added, “Gold’s gone sideways for sixteen months, that’s because the balance sheet in the Fed has gone sideways for the last sixteen months. The balance sheet is about to expand rapidly. And with that we’re going to get a rally in the Gold price, it’s going to go hard this year and probably into the next.”

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

• Gold, $1,665.80, Down $5.30.
• Silver, $31.57, Down $0.43.

The week began with a slight downward movement in Precious Metals prices as the U.S. dollar regained some ground against foreign currencies. The market anticipated a shift in prices from a heavy slate of U.S. data that was released throughout the week along with the Federal Reserve announcement on further stimulus measures.  Investors were being cautious as they awaited news on the Fed’s QE program.  MKS Finance's head of marketing, Frederic Panizzutti, said, “The market is on hold ahead of the U.S. Federal Reserve's meeting, and expects comments on further quantitative easing measures.”

Consumer confidence levels fell to 58.6 for the month of December, below economists’ prediction of 64. Consumer concern comes after U.S. politicians reached an agreement to avoid the fiscal cliff, which increased taxes for many Americans and left budget decisions to be handled at a later date. “The increase in the payroll tax has undoubtedly dampened consumers' spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement.

THE FED CONFIRMS THEY WILL CONTINUE WITH THEIR BOND BUYING PROGRAM

Precious Metals reacted Thursday morning to investors frustrated by Gold’s movement Wednesday after the Fed announced they would continue their bond buying program. Analysts suggest Gold moved ahead of the anticipated statement from the Fed as the bond buying had been forecasted. Investors are patiently waiting Friday’s nonfarm payroll data to show how the U.S. labor market is performing. “The intense focus on employment means that this Friday's report remains crucial in forming market expectations on future policy,” UBS analyst Joni Teves said in a report. “Some adjustments to positioning are likely to emerge heading into tomorrow.”

GREAT NEWS FOR THE STOCK MARKET

The U.S. stock market is close to experiencing its best performance since 1989. “Today, traders will be looking toward tomorrow’s monthly employment report, thus holding back funds earmarked for equity purchases until they see how many jobs the economy created during February,” Fred Dickson, chief investment strategist at Davidson Companies, said.

THE WEEK ENDS WITH DISAPPOINTING U.S. DATA

Gold and Silver prices  jumped this morning  after the release of U.S. payrolls data. In a report before the release, UBS said, “Current price levels, which are essentially where Gold hovered before the U.S. GDP print, suggest that expectations are once again skewed towards positive payrolls figures.” The prices of Gold and Silver were both flat before the data, so investors seem to be disappointed by the report.

Employment grew in January however, it was not enough to offset the unemployment rate’s increase.  The economy added 157,000 nonfarm jobs, but unemployment increased to 7.9 percent. One likely reason this affected Gold and Silver is that the Federal Reserve is unlikely to make any changes to its very accommodative monetary policy with that news. The Fed has set actual goals for the unemployment rate – 6.5 percent – and quantitative easing is expected to continue until the unemployment rate hits that figure.

The U.S. Senate approved legislation today suspending the debt ceiling until May 18, 2013.This gives the U.S. the ability to borrow any amount until that day in May. Those additional debt obligations will be added to the current debt limit of $16.4 trillion. This brings to light the March 1 deadline for sequestration. Sequestration is across-the-board spending cuts of $1 trillion with a large chunk coming out of the defense budget. Although some in government think sequestration is a foregone conclusion “I think sequester’s going to happen,” Senator Tom Coburn said. Economic advisors have cautioned that a sequester could derail the economic recovery predicting job loss and a drop in the economic recovery.

The upcoming three dates to watch:

March 1 is the date of sequestration.  This starts automatic cuts in spending.

March 27 is the date of the Continuing Resolution, also known as a temporary spending bill.

May 18 is the date when the debt ceiling will be re-established, including the spending above the $16.4 trillion debt we have.

For a moment today, the  DOW Jones Industrial Average broke the important 14,000 markfor the first time since 2007. Positive news about retail investors putting money into stocks and a mostly optimistic jobs report are credited as spurring on the surge. Investors are looking ahead to what moves the Federal Reserve might make. A continuance of the bond buying program helps stimulate the economy and more stock-buying.

At 1:05 p.m. (EST), the APMEX Precious Metals spot prices were:

• Gold, $1,672.20, Up $9.70.
• Silver, $31.95, Up $0.56.

Gold and Silver prices  jumped this morning  after the release of U.S. payrolls data. In a report before the release, UBS said, “Current price levels, which are essentially where Gold hovered before the U.S. GDP print, suggest that expectations are once again skewed towards positive payrolls figures.” The prices of Gold and Silver were both flat before the data, so investors seem to be disappointed by the report.

Employment grew in January however, it was not enough to offset the unemployment rate’s increase.  The economy added 157,000 nonfarm jobs, but unemployment increased to 7.9 percent. One likely reason this affected Gold and Silver is that the Federal Reserve is unlikely to make any changes to its very accommodative monetary policy with that news. The Fed has set actual goals for the unemployment rate – 6.5 percent – and quantitative easing is expected to continue until the unemployment rate hits that figure.

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

• Gold, $1,674.10, Up $11.60.
• Silver, $31.93, Up $0.55.