Gold closed higher in New York yesterday at $1,096.85/oz. It rose overnight in Asia to over $1,103/oz prior to giving up those gains and moving downward slowly. Gold is currently trading at $1,091.00/oz and in euro and GBP terms, gold is trading at €775/oz and £674/oz respectively.
Risk aversion remains in place with renewed concerns about the effects of the Chinese monetary tightening and the ramifications for the Chinese and global economy. Any renewed uncertainty regarding the Bernanke’s reappointment could see even more risk aversion and investors seeking safe havens.
Britain barely scraped out of recession in the fourth quarter of 2009, but only just and with a far weaker growth rate (+0.1%) than expected. With growing inflationary pressures the Bank of England has the dilemma of needing to increase interest rates to protect sterling and prevent an inflationary spiral while at the same time increased interest rates might snuff out an already tentative recovery. The Federal Reserve and many other central banks face similar dilemmas. Savers will need to be incentivised to hold cash by interest rates closer to the long term average of 7%. For the time being savers are being penalised by zero percent interest policies which continue to make gold an attractive diversification.
Silver began the night at $17.06/oz but it has slipped slightly since. Silver is currently trading at $16.88/oz, €11.98/oz and £10.41/oz.
Platinum Group Metals
Platinum is trading at $1,530/oz and palladium is currently trading at $435/oz. Rhodium is at $2,550/oz.
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