Gold and silver track euro lower on ratings downgrades, fundamentals remain intact
Gold and silver track euro lower on ratings downgrades, fundamentals remain intact
Gold and silver edged lower this morning tracking a weaker euro, as wary investors focused on whether Greece will be able to convince Europe to grant a much-needed bailout and implement unpopular reforms.
Gold greeted the passage of tough reform and austerity measures by the Greek parliament on Monday with a minor rise in prices, but the sentiment quickly soured as doubts on the bailout deal arose.
Europe gave Greece until Wednesday to persuade sceptical international lenders that it would stick to the punishing terms of a multi-billion-dollar rescue package, endorsed by parliament as rioters torched downtown Athens. "There is a big question mark on implementation of all the measures, because the track record of Greece is so bad," said Dominic Schnider, head of commodity research at UBS Wealth Management.
The doubt over Greece and a warning by ratings agency Moody’s that it may downgrade the triple-A ratings of France, Britain and Austria weakened the euro and pushed up the dollar index, making commodities priced in the greenback expensive for buyers holding other currencies. However, somewhat countering this was news that Japan increased its asset purchase programme by 10 trillion yen, equivalent to some $130 billion.
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“In a world short of trustworthy governments, gold will remain a more important and permanent part of portfolios than it was in the pre-crisis days of innocence.”
The precious metals bull market we have experienced for the last 11 years is a long way from over, any pull back in prices should be viewed as nothing but an opportunity to accumulate bullion into your portfolio.
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