$USD Gold: Gold spot is sitting at around USD$1217, which is slightly up on the USD$1215 we saw Friday morning last week.
"Despite government debt and associated interest costs remaining within the AAA range, Fitch anticipates that the economic adjustment process will be more difficult and prolonged than for other economies with AAA-rated sovereign governments, which is why the agency has downgraded Spain's rating to AA+," Brian Coulton, head of EMEA sovereign ratings at Fitch, said in a statement.
"Everything seemed to be settling down ahead of the long weekend and then the debt crisis in Europe surfaced again with the downgrade to Spain. It had never really gone away, just put on the backburner, and as we saw, it quickly went from a simmer to a boil," said a trader in New York.
"As long as people are nervous, gold prices will rise," he added.
"Prices could get up to $1,225 when the market reopens on Tuesday after a three-day weekend, or they could suffer a quick correction and fall to around $1,200 if investors get rid of long positions to make up for losses in other markets," he said.
"It could go either way. On the one hand, you have people buying gold because they see it as a safe investment. On the other, with prices still relatively high, the temptation to take profits is there," he said.
Deutsche Bank recently upgraded its forecasts for gold prices to $1,450 per ounce in 2011 and $1,600 per ounce in 2012, but expected merely modest strength from gold in the near term as the market grapples with deflationary fears over the next quarter.
"After that, investors could again begin to worry about future inflation," Deutsche Bank said.
"Massive turnover has once more been seen on the PM gold fix on Friday, with traders suggesting one or more funds may be closing out its position - possibly option-related - as May draws to a close."
"Turnover stood at 695 bars per side, or around 278,000 ounces, with traders in London and Switzerland noting extremely heavy volumes this week. Gold fixed at $1,207.50 per ounce today."
"Often, central banks do business on the PM fix to get official prices - but traders said it was more likely related to funds - and options - today. Comex options expired on Tuesday and over-the-counter business on Wednesday."
NZD$: Expect moves in the NZD to be determined initially by those of the EUR which should move lower to start the week. Topside for the NZD will again be limited to resistance around 0.6850 in the short-term with current NZD/USD rates sitting at 0.6740.
NZD gold: The price of NZD gold has remained reasonably unchanged over the weekend, with the Memorial Day long weekend in the US delaying any reaction to recent news.
