Spot gold prices broke through previous highs and smashed records in several currencies during London trading on Tuesday, reaching $1,251.85 per ounce and 1,050.86 euros per ounce.
Continuing uncertainty about the sustainability of European sovereign debt and a new warning from the Fitch rating agency that Britain faces a fiscal crisis weighed on investor demand for the euro and pound.
The movement in spot gold prices was driven by perception that the metal will be a hedge against instability and inflation, while demand for physical gold bars actually fell as India, the world’s largest consumer of gold, bought less gold in response to soaring prices.
“The gold price continues to be supported by safe-haven inflows, linked to Europe’s debt crisis and uncertainty about returns from alternative investment assets,” said David Moore, a commodity strategist at Commonwealth Bank of Australia, to the Bloomberg News Service.
In Guatemala, the Inter-American Commission on Human Rights called on the government to close the Marlin mine owned by Goldcorp, the world’s second-largest gold producer by market value. There is no word yet on how the government will act, but a closure could lead to further contractions in the physical supply of gold.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.