Gold Steady Near Record on EU Debt Concerns
Source: Reuters (5/17/10)
"There's still very good support for gold. . .current bailout is just a sweetener."
Spot gold traded at $1,231.80 at 1018 GMT versus $1,230.05 late in New York on Friday, when it set a record of $1,248.95 before slipping.
On Sunday, German Chancellor Angela Merkel said a $1 trillion EU rescue plan had only bought the eurozone time to tackle its fundamental problem—a yawning gap between its strongest and weakest economies.
"There's still very good support for gold. The current bailout is just a sweetener. We'll need to wait and see whether they put in place actual measures to prevent eventual default," Standard Bank analyst Walter de Wet said.
"In the case of Lehman's it was banks which failed, so governments could bail them out, but now the governments look as if they might fail, so who is going to bail them out?"
U.S. gold futures added $5.90 to $1,233.30 an ounce. Gold priced in euro and sterling struck record as well as gold futures in Shanghai.
The euro meanwhile slid to a four-year low versus the dollar on Monday as sovereign debt worries fuelled concerns the single currency may drop further.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to a lifetime high of 1,214.065 tons as investors sought a safe haven from volatile currencies and declines in stock markets and oil.
Asian stocks fell sharply on Monday on euro zone debt worries, but European stocks edged into positive territory, limiting potential gains in gold.
"If U.S. equities manage to perform better today we could see gold coming off a bit," said de Wet.