SPOT MARKET prices to buy gold
remained steady around $1650 an ounce during Friday morning's London trading
– well within their range from mid-March – as stock markets and commodity
prices were also flat and US Treasury bonds gained following a credit ratings
downgrade for Spain.
Heading into the weekend, gold looked set to record
its seventh successive Friday PM gold fix between $1600 and $1700 an ounce.
Prices to buy silver meantime held above $31 an ounce
this morning after rallying in Thursday's US trading – though they
remained 2% down on the week by Friday lunchtime in London.
"Our concern with silver," says the latest
precious metals note from investment bank Natixis, "as
with gold, is that when global markets begin to return to a greater degree of
normality, the outflow from investors may be substantially larger than the
inflow from industrial or jewelry demand, which could lead to substantial
weakness in silver and gold prices."
Ratings agency Standard & Poor's last night
downgraded Spain two notches from A to BBB+, adding that the outlook for the
sovereign is 'negative'.
"The [Spanish] government has committed to a
target of 5.3% of GDP in 2012 and 3.0% in 2013," said an S&P statement.
"In our opinion, these targets are currently
unlikely to be met given the economic and financial environment. We forecast a
budget deficit of 6.2% of GDP in 2012 and 4.8% in 2013."
Yields on 10-Year Spanish government bonds rose to
touch 6% this morning, but by Friday lunchtime actually looked set to close
slightly down on the week.
German 10-Year bund yields meantime fell as low as
1.65% Friday morning, close to record lows hit earlier in the week.
Despite the Spanish downgrade, European stock markets
edged higher this morning, although the Euro Stoxx 50
index of the leading Eurozone blue-chip firms remains more-or-less where it was
six months ago.
"We are probably going to see more downgrades
from other rating agencies," reckons Philippe Gijsels,
Brussels-based head of research at BNP Paribas Fortis Global Markets.
"You will continue to see this consolidation
phase [in stocks] for some more time as the newsflow
is likely to be predominantly negative."
"Europe is headed to a suicide," said Nobel
Prize-winning economist Joseph Stiglitz Thursday.
"There has never been any successful austerity
program in any large country...the European approach definitely is the least
French Socialist Party leader Francois Hollande, who received the highest share of the vote in
last Sunday's French presidential election first round, called this week for
European economic policies to prioritize growth rather than austerity, adding
that he would hold a "firm, friendly discussion" with German chancellor
Angela Merkel if elected.
"It's not for Germany to decide for the rest of
Europe," Hollande told French television last
Earlier in the week, Hollande
said the European Stability Mechanism, the permanent bailout fund due to come
in in July, should be given "the necessary firepower" by the European
"I've always campaigned for the statute of the
ECB to be revised," Hollande said.
"I know Germany's reticence, but it would be
better for the ECB to be able to intervene as the first and last resort for
"Herr Hollande has
misunderstood the problems in his country and in other Euro area
countries," Michael Meister, a member of Merkel's CDU party, told
"If one throws money into a country with
structural problems that won't solve those structural problems...the aim is to
gain control over excessive debt, not increase it."
"A growth pact has to be focused on structural
reforms," agreed Spain's economy minister Luis de Guindos
"I do not see that the growth pact should involve
any sort of fiscal boost or stimulus."
The Euro meantime rallied against the Dollar in Friday
morning's European trading, climbing back above $1.32.
"The Euro/Dollar has held above $1.30 for some
time, in the $1.30-$1.32 range, which coincides with gold also being caught in
a range," says Robin Bhar, head of metals
research at Societe Generale.
"If the Eurozone crisis deepens and we see the
Euro/Dollar correct below $1.30, that could give a bit
of a lift to gold."
The Pound also rallied against the Dollar Friday,
hitting breaking through $1.62 to hit its highest level since last September.
Prices to buy gold
in Sterling fell to £1019 an ounce – 0.6% below yesterday's high
for the week.
Earlier on Friday, the Bank of Japan announced a
further ¥5 trillion ($62 billion) in quantitative easing on Friday, while
also leaving interest rates on hold at 0.1%.
Over in China, the Shanghai Futures Exchange said
Friday it is cutting its commission on various gold futures contracts in an
effort to support liquidity. Commissions on gold trading will fall from 30 Yuan
per lot to 20 Yuan per lot.