London Gold Market Report
THE WHOLESALE price
to buy gold continued trading in a tight range Tuesday morning
around $1538 per ounce – just over 2% off its all-time high –
following a flat day Monday as the US and UK had official holidays.
Stock and commodity markets meantime
rose sharply – while US Treasury bonds fell – after news of a
possible Eurozone agreement on a new financial aid package for Greece.
Silver prices gained 1.7% before
settling into a range just below $39 per ounce, still 20% of the peak seen at
the start of the month.
"Although there seems to be
sporadic scrap-selling of gold, physical market buying interest has been
strong so far this week, and we expect this trend to remain in place,"
says Walter de Wet, precious metals strategist at Standard Bank.
Asian precious metals trade saw a
"quiet market" on Tuesday, according to one Hong Kong-based bullion
"It's a very quiet start,"
agreed a Singapore dealer, speaking to Reuters. "But we saw two-way
business [on Monday]. Thailand and Indonesia were sellers [of gold], while
the Indians were the buyers. We also saw speculators buying silver."
The Euro price to buy gold hit
a one-week low of €34,261 per kilogram (€1066 per ounce) on
Tuesday morning, as the single currency continued the climb away from $1.40
started last Wednesday, reaching $1.44 by lunchtime in London.
"The total restructuring of the
Greek debt is not an option and isn't envisaged by anyone," Jean-Claude Juncker, chairman of the Eurozone finance ministers, told
reporters in Paris on Monday.
"There is no difference between
soft restructuring and restructuring," ECB executive board member Lorenzo
Bini Smaghi told the
Financial Times in an interview on Friday. "There is no such thing as an
'orderly' debt restructuring in current circumstances."
In Athens the Greek press reported
Tuesday morning that the country's government has agreed a deal with its
troika of creditors – the ECB, the International Monetary Fund and the
EU – to borrow a further €60 billion to enable it to service its
debt through 2012.
"Given the current state of
political and economic affairs in Europe, is there any reason to believe that
at the margin – and perhaps at the very center – money shall do
anything other than to leave the Euro and to gravitate toward gold?"
asked renowned investor Dennis Gartman on Monday.
Gartman last week
described gold as the "trump card" currency.
The troika last year agreed to lend
Greece €110 billion. Juncker warned last week
that the IMF may have to withhold its portion of the next tranche of the
bailout – due before July and worth a total of €12 billion
– due to IMF rules which prevent loans to governments that cannot
guarantee their solvency for at least 12 months.
Financial Times Deutschland reported on
Tuesday that Germany, the Netherlands and other countries were still pushing
for restructuring, asking private creditors to extend maturities on Greek
However, a Wall Street Journal story
claimed that Germany had dropped restructuring as a condition of any new
loans to Greece.
"These are just temporary
solutions," says Andrew Pease, senior investment strategist Asia Pacific
at Russell Investment Group. "Talk of additional aid for Greece has
given investors some relief for now...[but] that's
not a sustainable solution."
"The European problem is way beyond
Greece," adds BlackRock chief executive Larry
Fink, speaking to Bloomberg Television on Tuesday.
Away from Greece, the ECB on Friday
raised the amount by which it discounts the face value – otherwise
known as the 'haircut' – on Portuguese bonds offered as collateral,
from 5.5% to 10.5%.
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