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Thursday, May 10, 2012

Impact Europe debt crisis on Gold prices

Impact Europe debt crisis on Gold prices, situation will affect the Europe's, European Union paymaster Germany , gold prices may 11 2012, Gold slipped more than half a percent on Friday, heading for its worst weekly fall since March on weaker euro and equities, as investors failed to shake off worries about Europe's debt crisis threatening global economic growth.

Gold, though traditionally seen as a safe haven, bore the brunt of the sell-offs across risk assets such as equities, industrial metals and oil this week, forcing investors and speculators to sell bullion to cover losses in other markets, Gold eased $6.72 an ounce to $1,587.01 by 0257 GMT

We are still uncertain about what's happening out of the euro zone. For now, I think gold will trade largely like a risk asset and probably tracking equities as well. Support level is about $1,500.

Gold prices have fallen three consecutive days as Europe's debt crisis took center stage again. Borrowing rates increased in Italy and Spain. That added to pressure on the market created when supporters of tough spending measures designed to curb debt were removed from office in weekend elections.

Investors are worried that the unsettled situation will affect the Europe's recovery and perhaps hurt the global economy. Some sold gold to have cash accessible in case other buying opportunities occurred. Others cashed in after buying contracts on a bet that the price would fall,

In addition, the dollar has been stronger against other currencies. Gold and other commodities are priced in dollars so a stronger dollar makes them more expensive for traders using other currencies, such as the Japanese yen.

Until there is some clarification about the situation in Europe, many analysts expect commodities to remain under pressure.

Investors had turned to gold as a safe haven from risk during the debt crisis last year, sending prices to an all time high around $1,920 an ounce. But this year, bullion is trading more in line as a commodity that moves in the opposite direction to the U.S. dollar.

European Union paymaster Germany warned Greece on Thursday that European partners could only go on aiding debt-ridden Athens if it sticks to an international bailout programme rejected by voters in a general election.

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