By FXEmpire.com
Gold relaxed in today’s session after falling to a four-month low in the previous session, as an uptick in the euro after Spain moved to take aggressive steps to handle its banks and Europe’s bailout fund approved a key payment to Greece took some pressure off prices. Although later in the US session the euro tumbled again, while gold continued to hold close to even.
While the Eurozone debt crisis is continuing to boil , moves to address some of its problems are improving appetite for assets seen as higher risk, like stocks and commodities.
Gold was up to $1,591.96 an ounce after falling as low as $1,579.30 an ounce on Wednesday, its weakest since early January. Prices have fallen 3 per cent this week as concerns over the Eurozone debt crisis pressured the euro and other risk assets. While investors bought gold as a haven from risk during the debt crisis last year, it is now trading more in line with its traditional drivers, the dollar and other commodities. The Japanese yen seems to be the biggest benefactor of the run for safety.
Gold is currently trading more as a risky asset than a safe haven. While the US dollar has gained on the back of higher risk aversion, gold was sold off. The decline is
likely a consequence of liquidation in the paper market rather than lack of interest on the physical side.
The euro edged off a three-and-a-half month low against the dollar today, snapping eight sessions of losses, as stress in Spanish debt markets eased and after Greece secured funds needed for bond repayments, lowering the threat of a Greek insolvency and possible euro exit.
Although the Greek drama is far from over, at this time, it seems that we will have new elections to try to establish a government. But things are changing minute by minute. As well in Spain, there have been more and more whispers of default and bailouts as Spain’s borrowing costs continue to rise.
All of this drama and uncertainness, causes investors and speculators to flee to safe havens, as this continues and continue it will, gold should hold pretty much at its current level.
Click here a current Gold Chart.
Originally posted here
