Concerns that the European debt crisis will spread has seen equities, bonds and the euro come under pressure and gold rise in all currencies. With the euro having fallen to 1.30 against the dollar, gold has risen to near record nominal highs over €1,056/oz. Gold is also higher in Swiss francs, Japanese yen and sterling and appears to be targeting £900/oz (GBP).
The spreads on Italian and Belgian bonds have jumped to a post EMU high and the cost of insuring against default on Portuguese and Spanish government debt remains near record levels. The massive liabilities of the European banking sector are leading to sovereign contagion in the eurozone. Germany is not immune to the growing contagion in the monetary union and this has seen the cost of insuring German bonds rise above those of some Scandinavian countries.
With the crisis not going to be resolved anytime soon, safe haven demand for gold is set to remain high for the foreseeable future. With all the focus on the eurozone, markets are ignoring the massive fiscal challenges facing other industrialised nations such as Japan, the UK and the US.
Gold is currently trading at $1,383.18/oz, €1,064.35/oz and £892.28.
Silver is currently trading $27.41/oz, €21.10/oz and £17.68/oz.
Platinum Group Metals
Platinum is currently trading at $1,653.75/oz, palladium at $696.00/oz and rhodium at $2,300/oz.