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The Dollar price of Gold Bullion rallied Tuesday morning in London, hitting $1503 per ounce – slightly up on last Friday's close – as stocks were mixed and commodities and US Treasury bonds rose after President Obama held meetings on the debt ceiling.
Heavy selling in both Asian and US trade saw Gold Bullion prices twice fall to $1492 per ounce on Monday, with a rally in London in between.
"The break below $1504...has gold in a negative light," say technical analysts at bullion bank Scotia Mocatta.
"We would need a close back above $1512 to shake the uncertain outlook."
"The price won't likely fall below $1470," reckons Park Jong Beom, trader at Tong Yang Futures in Seoul, citing the Euro crisis and continued loose US monetary policy as factors supportive of the Gold Bullion price.
The Silver Price meantime climbed to $34.17 per ounce on Tuesday morning – 11% down on where it started the month – before easing back slightly.
"Technically silver is in a falling channel," says a trader in Tokyo.
"Some industrial users have been Buying Silver, but it is not enough to push prices back up because investors are not buying."
President Obama meantime met with Senate majority leader, Democrat Harry Reid, and Senate minority leader, Republican Mitch McConnell, in separate meetings on Monday to try to break the deadlock on deficit reduction ahead of a vote on whether to raise the $14.3 trillion federal debt ceiling.
President Obama believes that "a balanced approach is the right approach," said White House press secretary Jay Carney on Monday, arguing that increased tax revenue as well as spending cuts should form part of a deficit reduction package.
The US Treasury has said it will hit the debt ceiling by August 2, after which it will be unable to cover payments to government bond holders unless the ceiling is raised.
"[But] the Dollar is still looking strong in the face of the Eurozone debt crisis," says Hou Xinqiang, analyst at Jinrui Futures in China, adding that the Dollar's strength means "gold is facing more downside pressure in the short run."
Since the start of 2011, however, the Euro has gained 7% against the Dollar. The Euro Gold Bullion price, meantime, rose to €1054 Tuesday morning – still 0.8% below where it started the year.
Here in Europe, Greece began its fourth general strike of 2011 at midnight on Tuesday, ahead of the parliamentary vote on a new austerity package, agreed as part of a new aid deal.
"The stability of the entire Eurozone would be in danger" were Greece to reject the package, German finance minister Wolfgang Schaeuble said on Sunday, adding that the next tranche of last year's bailout would be threatened.
"Germany's internal debate about whether to pay for the Greek debt is risible," says former German Joschka Fischer.
"Refusing to pay is not a viable option, because Germany and all other Eurozone members are in the same boat. A Greek default would threaten to sink them, too."
"Lying below the surface are much bigger countries, like Spain and Italy," says Steve Barrow, currency strategist at Standard Bank.
"And even if Greece votes itself more austerity and receives more cash...the problems of the Eurozone will deepen, they will not ease."
Elsewhere in Europe, Norway's trade minister Trond Giske said Monday that the Norwegian Krone would not offer investors protection from a European crisis.
"I don't think the Norwegian Krone and the Norwegian economy is big enough to become a safe haven for the large investors," adding that Norway is "very closely connected" to the Euro as 80% of its exports go to the European Union.
Central banks, meantime, look poised to Buy Gold over next decade, according to a poll by investment bank UBS. The survey found that 6% of central bank reserve managers expect the biggest change in their reserves over the next 10 years will be the addition of more Gold Bullion.
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