COM: Gold may gain as uptrend seen in Greek bonds again
Gold touched over $1,150/oz late in New York before dipping slightly to close with a gain of 0.79%. It has range traded from $1,144/oz to $1,149/oz in Asian and early European trading this morning. Gold is currently trading at $1,147/oz and in euro and GBP terms, trading at €856/oz and £743/oz respectively.
While gold remains essentially flat in most currencies, trading has been volatile this morning. Gold remains near record (nominal) highs in the beleaguered euro and pound but is lagging in the dollar due to recent dollar strength. The risk of contagion remains and may even have increased - this is leading to increasing talk of gold becoming an important reserve currency again.
With negative real interest rates and savers and many bond holders internationally effectively losing money due to low yields and rising inflation, gold remains an attractive diversification. Gold's lack of yield - the opportunity cost of owning gold - is no longer the disadvantage it once was and this scenario looks likely to continue for the foreseeable future. Prospects of a hung parliament in the UK and a possible sterling devaluation are leading to increasing diversification into gold by UK citizens (see News).
Gold is likely to be supported today by the fact that Greek bond yields have surged again. Greece's benchmark 10-year bond yield rose to 8.13 percent, the highest since 1998 and more than twice the comparable German bond rate.
The cost of insuring government debt against default also climbed to a record. Markets remain sanguine in the short term about these risks but that will likely change soon and lead to a new bout of risk aversion which should again lead to higher gold prices.
Silver
Silver has risen from $18.02/oz to $18.15/oz this morning in Asia. Silver is currently trading at $18.12/oz, €13.49/oz and £11.72/oz.
Platinum Group Metals
Platinum is trading at $1,752/oz and palladium is currently trading at $570/oz. Rhodium is at $2,950/oz. Palladium for immediate delivery advanced to the highest level since July, 2008. Platinum for immediate delivery rose to the highest level since August, 2008.
Chinese and Asian imports remain strong and higher demand from the automotive industry internationally is also leading to buying. GFMS is due to publish its 2010 Platinum and Palladium Survey at 1300 GMT.
