Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Rallies Back Above $1600, as Italy "May Also Need Rescuing"

Commodities / Gold and Silver 2012 Jun 12, 2012 - 12:33 PM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleBULLION prices on the wholesale gold market rose back above $1600 an ounce shortly before Tuesday's US trading, after failing to breach that level in the earlier Asian session, while European stock markets also ticked higher after a quiet morning's trading.

A day earlier, gold briefly rose above $1600 on Monday following the news that Spain will borrow up to €100 billion to rescue its banks, but along with stocks and the Euro gold failed to hold those gains.


Silver prices meantime jumped to $28.94 per ounce, a 1.5% gain on the week so far, while commodity prices reversed earlier losses.

Earlier on Tuesday, Indian dealers reported flat trading, with one citing traditional gold buyers' lack of spare cash.

"Farmers are not buying as it is their sowing time," said Ketan Shroff, director at Pushpak Bullion, speaking to news agency Reuters.

Away from the gold market, Spanish 10-Year government bond yields rose to their highest level this month Tuesday morning, breaching 6.6%.

"There's a risk that Spain may be downgraded," reckons Alessandro Giansanti, senior rates strategist at ING in Amsterdam.

"There are still concerns about the seniority of the outstanding government debt after the bailout, and that means if you want to invest in the bond you need a higher risk premium to compensate."

Ratings agency Moody's last week set out a case for a possible Spanish downgrade as a result of any bailout, citing the experience of private sector bondholders who were obliged to take losses in Greece's debt restructuring in March.

"The debts of Euro area sovereigns that are dependent upon funding support from official sources represent noninvestment grade risks," said a Moody's statement released Friday, the day before it was confirmed Spain would seek a rescue deal for its banks.

"Future support – particularly if likely to be needed for a sustained period – would likely be made conditional on loss sharing with private investors or in extremis withdrawn altogether."

Elsewhere in Europe, yields on Italian 10-Year bonds hit five-month highs this morning.

"It may be that, given the high rates Italy pays to refinance on markets, they too will need support," said Austrian finance minister Maria Fekter Monday night, although by Tuesday morning Fekter said she sees no sign that Italy will make a bailout request.

Every country in the European Union should agree to have their large banks supervised by a single cross-border supervisor, according to European Commission president Jose Manuel Barroso.

"There is now a much clearer awareness among European member states about the need to go further in terms of integration," said Barroso Monday, in an interview with the Financial Times.

The Commission last week published plans for a so-called banking union, which would include pan-European deposit insurance, funded by participating banks, as well as greater supervision of banks across the 27-member EU. 

Britain's chancellor George Osborne however has said the UK will not be part of such an arrangement, while Germany's central bank has also expressed opposition to the idea.

On the currency markets, the Euro hovered around $1.25 Tuesday morning, 1.7% up on the two-year low hit at the start of the month.

The gold price in Euros meantime spiked to €41,249 per kilo (€1283 per ounce), 0.8% up on where they started the week.

"Gold is going up, down or sideways dependent on what is going on in the Euro/Dollar rate," reckons Nic Brown, head of commodities research at investment bank Natixis.

In Buenos Aires meantime Argentina's president Cristina Kirchner has submitted draft legislation to enable US Dollar-denominated debts to be paid in Pesos, the Wall Street Journal reports

"There is a lot of speculation about supposed plans to 'Pesofy' the economy," says one Buenos Aires-based trader.

It is not clear whether the proposed legislation will be applied retroactively, or if it will apply to government debt. In August, Argentina is due to make a $2.2 billion payment on so-called Boden bonds, which were issued as part of its 2002 debt restructuring.

An unofficial exchange rate for so-called 'Blue Dollars' has emerged in Argentina. The government's interior minister warned last week that discussing the unofficial rate was "an illegal act".

Kirchner's bill carries echoes of a move by Vietnam's central bank last month to restrict lending in currencies other than the Dong. Vietnam, another country whose economy has seen so-called 'Dollarization', has also introduced various laws aimed at regulating its domestic gold market, including banning the use of gold as money.

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in