Gold’s London AM fix this morning was USD 1,720.00, EUR 1,308.98, and GBP 1,087.56 per ounce. Yesterday’s AM fix was USD 1,717.00, EUR 1,315.31, and GBP 1,090.85 per ounce.
Gold Overview
Gold continued to retrace as uncertainty over Greek sovereign debt pushed investors into the safety of the US dollar. The yellow metal posted a sharp rally during January but the danger that at any moment something nasty could kick off requires caution so the odd profit taking is not really a surprise. Even if on the long term many investors expect gold to keep on rising, on the short to medium term things look different now with daily developments dictating the next immediate direction. Overall, gold lost $4.80 to $1720.10 and further drops towards the $1700.00 mark are definitely possible.
Overview
The euphoria over the positive impact the US employment report might have on the energy sector was short lived as yesterday the WTI contract declined again. The re-emergence of US crude oversupply seems to put downward pressure on WTI crude prices but at the same time, demand for Europe’s Brent contract is getting stronger thus widening the gap between the two to over $19.00. Not only that an embargo on Iranian oil led to concerns over crude supplies in Europe but now there are reports of heightened demand for Brent crude from Asia.
EUR/USD Overview
The early plunge in the single currency against the US dollar was triggered by reports in the media that Greek Prime Minister Lucas Papademos failed to strike a deal with political leaders over spending cuts and lowering the minimum wage. Sensing the danger and to save the day, Chancellor Angela Merkel went on German television saying ‘the EU cannot accept a Greek bankruptcy’. The comment reversed the trend and the euro closed 36 pips higher at $1.3130. So, this game of pushing and pulling goes on but the rally which started mid January seems to be stalling.
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