Gold Market Report
PRICE OF GOLD retained a slight weekly gain as the
close approached in London on Friday, trading above $1141 an ounce while the
Euro bounced – and world stock markets rose – following Greece's
formal request for a joint European and IMF bail-out.
Gold priced in Euros spiked within 0.3% of April 9th's record, hitting
€27,743 per kilo before easing back as the single currency rose.
investors looking to buy gold, the price held at £743 an ounce –
0.3% higher from last Friday's finish – after UK data showed the
economy growing half-as-fast as analysts forecast between Jan. and March,
adding just 0.2% year-on-year.
Crude oil and broader commodities were little changed.
"Greece is asking for the activation of the support mechanism,"
said a letter sent this morning by finance minister Papaconstantinou to the
European Commission, fellow Eurozone states, and the European Central Bank.
"The moment has come," Greek premier Papandreou told reporters,
apparently catching the European Commission unawares.
First it denied receiving a formal bail-out request. Then the EC said it will
take "some time" to trigger the rescue, currently agreed at a
maximum €45 billion (£60bn).
Thursday had seen Greek bond prices sink to new crisis-lows, driving the yield
offered by two-year debt above 10%.
As Greek bonds rallied on Friday, German Bund prices ticked lower alongside
UK and US Treasury debt.
Germany's Dax rose 1.4% by lunchtime in Frankfurt. Athens' stock market
jumped almost 2%.
"Although gold's Dollar-price may still be 6% below its late-2009 highs,
in Euro terms gold prices are up 6% from their Dec-09 peak," notes
Patrick Artus' team at French bank Natixis.
"This demonstrates gold's ability to protect investors from crises that
debase their own currency, but not those of other sovereign issuers."
"German investors have not been put off by the all-time high
expensiveness of gold in Euro-terms," reports Wolfgang
Wrzesniok-Rossbach from Hanau-based refinery group Heraeus.
"The Greek financial crisis continues to drive investors here to the
Industrial demand, in contrast, "has shown a slight reduction in demand
– current price levels appear to be simply too high," says
"Even at record prices of almost €865 an ounce" however,
scrap-gold flows into the refinery "have slowed down in recent
days," he adds.
Over in the credit-insurance market, the cost of protecting Portuguese
government bonds also slipped back on Friday – together with Greek
credit-default swaps – from yesterday's new record highs.
"The market believes that Greece will be forced to restructure its
debt," says Simon Derrick at Bank of New York Mellon in London, and
"The logic of such a situation for [Greek bond] investors is also simple
"There is no last mover advantage in such a circumstance.
"We also note outflows just starting to build from Portuguese debt in
recent days," Derrick is quoted by the FT's Alpha blog,
"although they are still relatively modest."
Precious-metals analyst Walter de Wet at Standard Bank also notes fears of
Euro-debt contagion today, writing "We doubt [the Greek rescue] would be
enough to lift concerns over sovereign debt levels in certain European
Even though the physical market is currently "quiet and directionless",
de Wet reports, "Underlying uncertainty should continue to support
Head of Research
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