The gold price has held around the USD$1200 mark after news of a European bailout package caused the international stock markets to recover some lost ground overnight.
"Gold held up well around the $1,200 area after the soaring stock market and ensuing euro bailout was evaluated by the markets," said George Gero at RBC Global Futures.
The ECB, IMF and EU put together a $1 trillion rescue package over the weekend and allayed fears that Greece’s debt crisis would contaminate other countries. The ECB even agreed to buy government bonds directly from EU member nations, a move previously ruled out because of fears of inflation. The overall consensus is that with a bailout of this level, money printing is about to go into overdrive in the Euro zone, a year after a similar move was introduced in the USA. Gold, historically anti-inflationary, is expected to trade within ranges over the short term, until the inflationary repercussions start to bed in – then the gold price should start to pick up sharply again.
"Gold outperformed the dollar last month, though both posted solid gains," said investment manager Andrew Karsh at Credit Suisse. "As a result, we are seeing the asset class continue to gain favour among investors in the current environment”
Stock markets around the world were positive after the announcement – the DJI was back up around 400 points
In NZD$, the focus remains overseas with the Euro, with commentators anticipating a small dip, but nothing too large or untoward.
The NZD$ gold spot price remains reasonably steady after Friday's spike.
