Gold rallied!

Yesterday, after an initial spout of weakness just before the open of the US markets, Gold rallied as US participants caught up (after Monday’s holiday) with the previous night’s developments on the Eurozone front. Unlike has been the case for some time, the upward momentum in gold price had little to do with euro/dollar movements (the currency traded mostly on an even keel), but rather just a product of heightened sentiment and renewed appetite for commodities in general.

This momentum, however, faded during Asian market trading hours, although enough interest remained to keep prices relatively stable. This morning we’ve seen some profit-taking emerge which has seen the complex lose some ground. However, with concerns over the Eurozone still very much alive (as evidenced by the region’s equity markets which look set to end another day in the red) we are seeing safe-haven demand and the associated buying on dips, limiting exposure to the downside.

In Europe, reports that a deal was reached to provide Greece with its next round of bailout funds – totaling €130 billion – helped the euro currency advance modestly against the U.S. dollar.  The exchange rate rose from just under 1.32 prior to the announcement to as high as 1.3250.  In doing so, the decline in the dollar helped propel the gold price to its 1.9% gain.

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