Gold prices edged higher Tuesday morning and are poised to climb on the latest damage inflicted by the sovereign debt crisis: Standard & Poor's ratings service reduced the sovereign debt rating of Italy, Dow Jones Newswires reports.
Bloomberg reports the rate cut might prompt an increase in regional borrowing costs. Yet Tuesday's increase in gold price after Monday's decrease by 2 percent is certainly welcome to gold bugs.
"Continued concerns over euro-zone sovereign debt are likely to drive gold higher before policy makers are forced to take more effective action," states a Tuesday report by chief commodity analyst Bjarne Schieldrop of SEB AB. "Under current circumstances, a long position in gold is highly recommended."
At 8:43 a.m. on Tuesday, gold futures increased 0.75 percent, a $13.40 lift to $1,792.30 per troy ounce.
The precious metal appears to be driving back toward the $1,800-per-troy-ounce threshold but bullion's recent record of volatility is uncharacteristic. The record price of $1,923.70 per troy ounce was set on September 6 but stock markets have lost and gained while the value of the dollar has done the same, compromising the yellowish metal's stability.
Risk Disclosure
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.