New Record Euro and Pound High on Gold Price

2010-MAY-07

From the GoldMoney News Desk --

Greece’s ongoing debt saga continued to steal the headlines this week. At the ECB (European Central Bank) meeting on Thursday, president Jean Claude Trichet said that Greece would not default on its loans, however he also said that buying Greece’s sovereign debt had not been discussed at the meeting. The IMF have pledged to help Greece, and a 110 billion Euro rescue package is on the way, but attached to this are harsh “austerity measures” which have angered the public and caused rioting in Athens.

Fears are now spreading that more European countries could become infected by the debt crisis after ratings agency Standard and Poors cut Greece, Spain and Portugal’s sovereign debt rating last week. The markets responded to this fear by buying gold to protect from rising global credit risk. Gold continued to hit new record highs in Sterling, Euros and Swiss Francs at £818.18, €960.85 and CHF1,345.90 respectively. Silver, platinum and palladium however did not fair so well. Their industrial uses held them back as global economic recovery was reassessed.

At the start of the week gold made an initial push to $1,200/oz but failed just above $1,190 with profit taking pushing prices down again. Bargain hunting stepped in below $1,160 and pushed the metal back up to $1,175. Then on Thursday evening renewed fear took over and gold soared to $1,210, just under a lifetime high of $1,226 hit on December 2009.

Axel Merk, president of Merk Mutual Funds told Reuters “Gold is yet another currency…but it does not have the debt issue. It’s not just a Greek problem, not just a European problem, but a global problem. Gold is one way that investors can try to diversify in a world where there are no risk-free assets anymore.”

Silver fell early in the week when profit taking from relatively high levels pushed the metal down from $18.70/oz on Tuesday afternoon, to $17.05 just 24 hours later. Towards the latter part of the week the silver price was not inflated by the same factors that had such a big impact on gold, and languished near $17.50.

Platinum spent most of this week heading south and by Wednesday was at a low of $1,618/oz. Platinum did have a short rally on Thursday and reached $1,682, but could not hold at this level and fell back to around $1,650.

Palladium fell along with platinum at the start of this week, hitting a low of $480/oz on Wednesday. The white metal did manage to recover on Thursday but got stuck around $500.

All data and quotes sourced from Reuters.