Gold broke through USD$1190 on Tuesday night after confirmation that Greece would receive a bailout. High USD$ prices against the EUR€ saw gold pull back to USD$1170 on overnight trading, due to profit taking and to make up for losses on the stock markets.
Silver has followed gold – breaking up to USD$19 and dropping to below USD$18 overnight.
Risk aversion is expected to continue due to skepticism over the Greek bailout succeeding, coupled with rumors that Spain now require a bailout from the IMF which has been strenuously denied by Prime Minister Zapatero. Short term this may impact on the Gold futures price. Medium term, it should help bolster the spot price, as investment pulls out of the Euro and Sovereign and moves to safe haven investments such as gold.
In currencies – the NZD$ moved over 0.73 on Tuesday, pulling back by over a cent Wednesday as the USD$ strengthened due to the EUR issues. Over the ditch the AUD$ took a knock after the RBA raised their rate by .25 to 4.5 and announced it will hold at this rate for a while.
NZ currency fluctuations meant the USD$ spot price drop was covered with the exchange rate drop, again tempering any overall movement in NZD$ gold price, similar to the movements we’ve seen this year. Gold peaked just after midnight New Zealand time at around NZD$1620, with afternoon trading seeing the price down to around NZD$1600.
Looking forward we expect more volatility in currency and metal prices due to the Euro zone woes. Gold has broken through to new records in currencies in this zone (EUR, CHF and GBP ) as they drop against the USD$ and the gold spot price remains volatile.
