Data provided by McGregor BFA
All data is delayed
Loading...
See More

Gold powers above $1600 on debt fears

Jul 18 2011 11:51 Reuters

Related Articles

Gold shines before eurozone meeting

Gold spikes on US debt, stimulus hint

Gold edges higher on inflation fears

Gold regains sparkle on softer dollar

Gold hits record on US, EU debt worries

Gold off record, silver slides

 
Singapore - Gold prices rallied to record highs above $1 600 an ounce in Europe on Monday as investors - spooked by the eurozone debt crisis and the threat of a US default - bought into the metal as a haven from risk.
 
Spot gold rose as high as $1 600.40/oz and was up 0.4% at $1 598.76/oz in morning trade. Gold rose more than 3% for a second straight week to Friday, a feat it has not achieved since February 2009.
 
Data from US futures regulator the Commodity Futures Trading Commission showed on Friday that managed money sharply raised bullish bets in US gold futures and options in the week ended July 12, as bullion prices rallied.
 
“CFTC data shows a surge into gold, so despite the higher levels the professionals have returned to gold with a vengeance,” said Saxo Bank analyst Ole Hansen.

“The stress test result was met with a lukewarm response, with focus again switching back to Europe. When that happens, gold is often allowed to perform despite the dollar strengthening at the same time.”

Sovereign default fears are growing in both Europe and the United States. The United States is struggling with deficit reduction talks ahead of the White House’s July 22 deadline on a deal to raise the $14.3 trillion debt ceiling.

Eurozone ministers will meanwhile meet on Thursday to discuss the financial stability of the euro area.

German Chancellor Angela Merkel called on Sunday for private investors to make a major contribution to bailing out Greece, as pressure rose for radical action to cut the country’s debt burden.
 
On the foreign exchange markets, the euro slid 0.7% against the dollar. Sovereign debt worries led investors to shift funds into safe haven currencies like the Swiss franc and cut exposure to riskier assets.

Gold rallied across a number of major currencies, also hitting record highs in euro, sterling, rand and Canadian dollar terms.

“Investors are increasingly looking to gold as a safe haven as the US dollar, pound sterling and the euro continue to devalue against stronger currencies such as those of Canada, Australia, Norway and Switzerland,” said Angelos Damaskos, chief executive of Sector Investment Managers.

“Sovereign debt problems in the developed world persist and continue to hamper economic growth. Quantitative easing is the easy solution but rising inflation creates a headache for central bankers.”

Stocks under pressure
 
Stock markets fell in Europe as bank stocks came under pressure after a capital stress test failed to dispel fears about the regional debt crisis, while Bund futures opened higher as uncertainty ahead of a eurozone meeting this week underpinned appetite for safe haven assets.

US 10-year Treasury notes fell in Asian trade on Monday, with intraday moves set to stay choppy in the near term due to uncertainty about the fate of US debt talks and worries over the eurozone’s sovereign debt crisis.

US gold futures for August delivery were up $9.50/oz at $1 599.60, having peaked at $1 601.20.

Other commodities appeared lacklustre, meanwhile, with Brent crude oil easing 0.6% and US crude futures 0.2%. Industrial metals like nickel and aluminium eased, while bellwether copper was little changed.

Growing worries of a possible sovereign debt default on either side of the Atlantic are also weighing on oil prices.

Meanwhile, other precious metals tracked gold higher, with silver rising above $40/oz for the first time since early May. The grey metal rallied to a record $49.51 an ounce in April before correcting sharply.

It has rallied more than 15% in the last two weeks, however, as gold prices have risen.

“Towards the end of the summer, an expected pick-up in interest in silver could take the gold/silver ratio lower for the rest of 2011,” said BNP Paribas in a report released Friday.

“In 2012, the silver price may in turn weaken as the outlook for gold turns more negative.”

Silver peaked at $40.15/oz and was later bid at $39.95/oz against $39.27. Spot platinum was bid at $1 759.50/oz versus $1 748, while spot palladium was at $782.72/oz against $771.
jse  |  commodities  |  gold  |  markets
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Zuma: Pray for peaceful polls

President Jacob Zuma has asked members of the Universal Church of the Kingdom of God to pray for peaceful elections on 7 May.

 
 

Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...