Gold New Record Nominal Highs in Euros and Pounds on Global Debt Contagion Concerns

By: GoldCore

Europe's debt crisis has seen gold prices climb to new record highs in euros and British pounds at EUR 1,087.80/oz and GBP 944.93/oz respectively. Contagion concerns are mounting due to the failure of the ECB, the IMF and respective governments to tackle the sovereign debt crisis.

Cross Currency Rates

The scale of the debt crisis affecting Greece, Ireland, Italy, Belgium, Portugal and Spain, is leading to growing concerns of a knock-on deleterious impact on European banks and the global banking system.

The real risk of contagion will likely lead to increasing safe haven demand for gold.

Gold should also be supported today by the OECD's warning regarding the U.S. and Japan's very poor fiscal situations and their lack of credible plans to tackle high and spiralling budget deficits.

Gold Bullion in US Dollars – 30 Days (Tick)

Gold has broken out in euros and pounds and this strength is likely to be seen in dollar terms with the record nominal high of $1,577.77/oz possibly challenged again.

There is good support at $1,460/oz (see chart above) with strong physical demand seen internationally.

Gold in dollar terms is challenging resistance at $1,527/oz and a breakout close above this level could see a quick move to challenge resistance at the record nominal high of $1,577.57/oz and the psychological level of $1,600/oz.

Gold Bullion in US Dollars – 20 Days (Tick)

Long term, the real record high of $2,400/oz from 1980 remains likely to be achieved.

Gold bears' and bubble callers' predictions of falling gold prices are again likely to be proved badly wrong. Rather than continually attempting to predict the future and the top of the market, they would better serve their readers by properly analysing the real fundamentals driving the market and informing people of the importance of having at least some allocation to gold, especially from a financial insurance and diversification point of view.

SILVER
Silver's fundamentals remain even stronger than gold's and the recent paper-driven sell off due to a series of margin calls and heavy selling on the COMEX appears to be over.

Silver has support at the recent low of $32.31/oz. There are continuing calls by knowledgeable silver analysts for silver to rise above $100/oz, suggesting that silver may rise above its nominal high of $50/oz sooner than the silver cynics expect.

Silver Bullion in US Dollars – 10 Days (Tick)

Gold
Gold is trading at $1,526.40/oz, €1,085.48/oz and £941.35oz.

Silver
Silver is trading at $37.15/oz, €26.42/oz and £22.91/oz.

Platinum Group Metals
Platinum is trading at $1,767.25oz, palladium at $740/oz and rhodium at $1875/oz.

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This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

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