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 Gains amid Berlusconi Confusion, Greece "Must Reform or Get Out of the Euro"

Commodities / Gold and Silver 2011 Nov 07, 2011 - 09:30 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleU.S. DOLLAR gold bullion prices climbed to their highest level in almost seven weeks on Monday, hitting $1778 an ounce – 3.1% above where they started the month, amid confusion over whether or not Italy's prime minister had resigned.

Silver bullion hit a high of $34.80 per ounce – 0.3% below last week's high, but 8% above last week's low.


"The probability of precious metals trading in a volatile manner in the coming sessions is rather strong," says a note from Swiss gold bullion refiner MKS.

European stock markets rallied this morning following a weak start, while commodities also edged higher. Major government bond prices also saw gains, in contrast to those of distressed Eurozone sovereigns.

Greece is to form a national unity government after George Papandreou agreed over the weekend to step down as prime minister – after the European Union gave Greek politicians until Monday evening to explain how they will enact reforms agreed as part of a €130 billion rescue deal.

Former European Central Bank deputy president Lucas Papademos is the favorite to take his place, according to Greek press reports. Papademos was governor of Greece's central bank between 1994 and 2002 – a period that covered Greece's preparations to join the Euro.

"The Greeks have a choice," Germany's vice chancellor and economy minister Phillip Roesler told mass market tabloid Bild on Monday.

"Reform in the Euro area or don't reform and get out. There is no third way...the Greek government must at least understand that at some point our patience will end."

"Eurozone solidarity has its limits," echoed Wolfgang Schaeuble, Germany's finance minister, speaking in Finland.

The move to a national government "by no means leads Greece out of the woods," says one gold bullion dealer here in London.

"[However], some commentators are already shifting their attention to Italy, whose borrowing costs are soaring."

Yields on Italian 10-Year government bonds hit 6.6% Monday morning – their highest level since the creation of the Euro. Italy has to refinance nearly €300 billion of sovereign debt over the next 12 months, according to its official figures.

Italian prime minister Silvio Berlusconi meantime was forced to deny rumors of his impending resignation this morning – following defections from his party that some believe have left him without a majority ahead of a key finance vote tomorrow.

Over in Brussels, Eurozone finance ministers are meeting to continue work on scaling up the European Financial Stability Facility – the single currency area's €440 billion bailout fund.

"Considering the pressure on countries like Italy...there is a sense we need to have [a leveraged EFSF] ready already by the end of this month," one official told newswire Reuters.

"The leveraged EFSF may still turn into a bazooka," says Joachim Fels, chief global economist at Morgan Stanley in London.

"But so far it looks more like a water pistol."

The EFSF has resurrected a €3 billion bond auction which it cancelled last week – and has received €2 billion of orders so far, according to one of the banks handling the sale. 

A spokesman for German chancellor Angela Merkel revealed Monday that she told last week's G20 summit that Germany's government could not use any of its reserves – including gold bullion and International Monetary Fund Special Drawing Rights – to boost the EFSF since these are controlled by the Bundesbank.

Since October 27 – the day the latest Euro Summit deal was unveiled – the gold price in Euros has risen 4.6% to €41,552 per kilogram (€1292 per ounce).

"Gold is responding to the general market mood that the European crisis will develop much worse before it gets better," reckons Bayram Dincer, at LGT Capital Management in Pfaeffikon, Switzerland. 

"At the moment we do not have a foreseeable lasting solution and high uncertainty remains."

Over in New York meantime, number of bullish minus bearish contracts on the Comex exchange held by noncommercial gold futures and options traders – the so-called speculative net long – rose for the second week running in the week ended November 1, according to data published Friday by the Commodity Futures Trading Commission.

The spec long rose 5.8% to the equivalent of 553.8 tonnes of gold bullion. Speculative short positions fell by 22% over the period, to the equivalent of 70 tonnes of gold bullion.

"With two weeks of improvement in the net position, coupled with a drawing down of short positions, the speculative market finally seems more confident about gold's prospects," says Marc Ground, commodities strategist at Standard Bank.

The continued rise in speculative net longs implies "that gold is back in favor" agrees today's note from precious metals consultancy VM Group.

"The current backdrop is certainly supportive [for gold]."

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 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