Greece is close to an agreement with the European Commission, European Central Bank and the International Monetary Fund on a fiscal plan and privatization program, Kathimerini newspaper reported, citing people close to Prime Minister George Papandreou. The dollar was little changed against six major currencies after dropping to a three-week low. Bullion typically moves inversely to the greenback.
Seeming progress in negotiations over a new aid package for Greece keeps gold trapped below $1,540” an ounce, Edel Tully, a London-based analyst at UBS AG in London, said today in a report. “Dollar weakness and Moody’s having put Japan’s sovereign rating on review for a possible downgrade underpins gold.”
Immediate-delivery gold fell $2.20, or 0.2 percent, to $1,532.60 an ounce by 10:33 a.m. in London. The metal yesterday reached $1,540.78, the highest level since May 4, and ended the month down 1.8 percent. Gold for August delivery was 0.2 percent lower at $1,533.50 an ounce on the Comex in New York.
Concern about faster inflation, Europe’s debt crisis, a weakening dollar and fighting in Libya boosted gold to a record $1,577.57 on May 2. Prices are up 7.8 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Japan’s debt rating was put on review for a downgrade by Moody’s Investors Service yesterday.
Debt Burden
Saddled with Europe’s heaviest debt load, Greece is seeking additional loans after last year’s 110 billion-euro ($158 billion) European-led package was insufficient to plug its fiscal hole. Luxembourg Prime Minister Jean-Claude Juncker said May 30 that the euro region’s leaders will decide on a new aid package by the end of June and have ruled out a “total restructuring” of Greece’s debt.
“Some investors are emboldened by signs that Greece will get a bailout and avoid default, and are selling their gold,” said Hwang Il Doo, a Seoul-based senior trader at KEB Futures Co. “Minor losses are inevitable for gold to extend its bull run.”
Silver for immediate delivery fell 1 percent to $38.1275 an ounce in London. Prices dropped 20 percent in May, the most since August 2008, as CME Group Inc. (CME), the Comex owner, raised margin costs to curb price volatility.
The U.S. Mint sold 3.65 million ounces of American Eagle silver coins last month, up 30 percent from April, its website shows. That compares with 15.2 million ounces in the first five months of last year and is the best January through May period since at least 1986, according to Mint data going back to that year. American Eagle gold coin sales fell 0.9 percent to 107,000 ounces last month.
Palladium declined 0.4 percent to $775.25 an ounce. Platinum was 0.2 percent lower at $1,824.50 an ounce. (source www.bloomberg.com )
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