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 Close to New Euro High as S&P Cuts Greece Credit Rating Again

Commodities / Gold and Silver 2011 May 10, 2011 - 09:08 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose for the second day in succession in London on Tuesday, recovering half of last week's 7% plunge from new all-time Dollar highs, as world stock markets also rallied again with commodities.

The Euro spot gold price rose above its peak of last week, trading at €34,028 per kilo after the Standard & Poor's agency downgraded Greek sovereign debt to the same credit rating as Belarus, Europe's lowest-ranked state.


Tuesday morning's London Gold Fix in Euros was set less than 2% below late December's all-time high.

"With the resurfacing of Eurozone sovereign debt concerns, we expect to see continued appetite for gold and silver," says Leon Westgate, London-based commodities strategist at Standard Bank.

"Given the recent sell-off, expect to see a return of investor as well as physical buying in search of value."

Short-term, the Greek downgrade "may provide a slight headwind for precious metals", according to another spot gold dealer in London. But longer-term, "the same factors behind the Euro slip also favor gold and silver."

An analyst from ratings agency Fitch told Reuters today that his agency is "actively reviewing" its rating for Greece.

Yields on Greek government debt fell slightly on Tuesday – down from 15.7% to 15.4% – as rumors circulated that Athens could receive another bailout.

Newspaper Kathimerini reported that the International Monetary Fund is lining up an aid package worth €80-100 billion, though it did not cite sources for the story.

Forecasting weak economic growth for years to come, the S&P ratings agency warned that Athens' creditors "could eventually" face a 50% cut to their bondholdings "to restore Greece's debt burden to a sustainable level."

"Gold looks quite comfortable at $1500, and would profit from any escalation in concerns over Greece's debt sustainability," says Edel Tully, precious metals strategist at UBS in London.

However, "volumes are very light [in precious metals markets] and as such the potential for exaggerated price moves is quite high."

Giant gold holder the SPDR Gold Trust – a physically-backed exchange-traded fund (ETF) that tracks the gold price – saw shareholder sales cut its holdings of physical gold bullion to a one-year low on Monday.

Down at 1202 tonnes, the $60 billion trust has shed 9% of its physical bullion since the peak of June 2010.

"We have seen a couple of [ETF] outflows over the last few days and this might have dragged the gold price down a little," reckons Commerzbank analyst Daniel Briesemann.

"The decrease we've seen over the last week isn't related to anything specific on gold."

Meanwhile on Tuesday, latest figures showed that China's trade surplus was $11.4 billion in April, nearly four times bigger than analysts had forecast.

China's exports grew 29.9% year-on-year, while import growth was 21.8%.

"This number will likely add to the pressure from Washington for Beijing to allow faster currency appreciation," said Brian Jackson, Hong Kong-based senior strategist at Royal Bank of Canada.

"But more importantly [the data] should persuade Chinese policy-makers that a stronger yuan can be tolerated by the economy and is warranted as part of their efforts to curb price pressures."

Chinese vice premier Wang Qishan is currently in Washington D.C. for the annual Strategic and Economic Dialogue between China and the US, and the latest trade data "will likely provide a touch more ammunition for the US in the talks," believes Alistair Thornton, economist with HIS Global Insight in Beijing.

Now holding Dollar interest rates at zero for 25 months running, the US will instead "argue that more needs to be done with the [Chinese] currency and interest rates," says Thornton.

By Adrian Ash
BullionVault.com

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

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2011

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