Gold jumped to as high as $1,138/oz in New York before falling back to close with a gain of 0.16% yesterday. It has since range traded from $1,134/oz to $1,138/oz in Asian trading this morning. Gold is currently trading at $1,135/oz and in euro and GBP terms, gold has risen and is trading at €852/oz (new record nominal highs) and £744/oz respectively. Support is at $1,120/oz and resistance is at $1,145/oz. Given the gathering momentum in the gold market - a close above $1145/oz could see us rise to $1160/oz quite quickly.
Euro gold has reached a new record high today just over €852/oz due to safe haven buying on concerns about debt laden Greece. Markets pushed Greece's risk premium to a euro lifetime high yesterday amid growing doubts over the country's capacity to resolve its debt crisis and fresh skepticism about the European Union-International Monetary Fund aid mechanism.
The Greek sovereign debt crisis is proving quite intractable and this inflation and sovereign risk is leading to robust demand for gold. Crude oil remains above $86 a barrel which is creating inflation concerns.
The risk is that if the Greek debt crisis is not resolved it could lead to a wider sovereign debt crisis. With government balance sheets ballooning it is becoming more difficult for governments internationally to fund their growing liabilities. Greece is the canary in the coal mine and this is what the record euro gold price is telling us.
It is important to note that there are similar fiscal challenges in the US. Los Angeles is only one month away from a fiscal crisis (according to the LA City Financial Controller) and California itself facing what has been termed a "debt timebomb" due to $500 billion worth of unfunded liabilities (see News section of our Home Page today). Many other US states such as Illinois, New York and Florida face similar significant fiscal challenges.
This would suggest that gold prices in dollars will likely follow and replicate euro gold in the coming months and reach new record (nominal) highs.
Silver
Silver has range traded from $17.92/oz to $18.02/oz this morning in Asia. Silver is currently trading at $17.95/oz, €13.40/oz and £11.75/oz.
