2012-02-21

Greece’s second bailout at a meeting this evening allowing gold price room to push higher

Confidence that Eurozone finance ministers will give the go-ahead for Greece’s second bailout at a meeting this evening has kept the dollar at bay, allowing gold price room to push higher this morning. In addition,
The move by the People’s Bank of China (PBOC) marked the latest maonetary easing measure designed to help stimulate an economy whose growth has slowed considerably in recent months. The PBOC’s move over the weekend has also helped lift the mood on the promise of growing liquidity. The central bank cut the reserve requirement ratio by 50 bps. We are sceptical that this lift to commodities will last, as our analysis shows this particular monetary policy tool to have the most benign effect on commodity prices, especially when it comes to Gold price.

Analysts at Citigroup predicted in a note to clients that the PBOC will lower the reserve requirement three additional times by the end of the year.  China’s central bank has lagged “behind the curve” and has “to catch up with more easing to repair already damaged credit demand,” the firm wrote.


Gold support is at $1,719 and $1,709. Resistance is $1,739 and $1,747.

Report from COMEX show Gold and silver could see a near-term pullback

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