Gauging gold to predict crunch time for Greece

Gauging gold to predict crunch time for Greece
2.5 5

Published November 6th, 2012 - 03:00 GMT via

Rate Article:

PRINT Send Mail
comment (0)
Raw gold
Raw gold
Follow >
Click here to add Antonis Samaras as an alert
Antonis Samaras
Click here to add Athens as an alert
Click here to add New Democracy party as an alert
New Democracy party
Click here to add Reuters as an alert
Click here to add Shanghai CIFCO as an alert
Shanghai CIFCO
Click here to add US Federal Reserve as an alert
US Federal Reserve

Gold prices have firmed up on the Comex subsequent to charting below $1700 levels Friday as positive US jobs data for the day portrayed a robust picture for the economy. At 10.10 am IST gold on the Comex is up 0.27% a nudge of 4.35 USD at $1679.75. Gold on India s MCX for December delivery was seen trading at Rs.30564 a gain of 0.2%. "In the short term gold may hover around Friday's low but there isn't much room on the downside as easing monetary policy is still a global trend " said Li Ning an analyst at Shanghai CIFCO Futures to Reuters .

The incessant cash printing by Central Bankers have aided inflation and currency debasement which is prompting investors to flock to gold. But having QE measures by US tied down to job market recovery by Federal Reserve could mean that easing measures may not continue in the very long term.

At least that is what the investors think about it. Now with massive selling in gold just past some amount of buying can be expected. It is possible that US apart markets would take cues from Eurozone crisis especially Greece where the Parliament is about to vote on an austerity bill even as Unions there are about to embark on a nation wide general strike. The proposed budget cuts are expected to be the last by Greek govt if words of Prime Minister Antonis Samaras is to be believed. "These will be the last cuts in wages and pensions " Samaras said on Sunday in a speech aimed at galvanizing the members of his New Democracy party. We promised to avert the country s exit from the euro and this is what we are doing. We have given absolute priority to this because if we do not achieve this everything else will be meaningless.": Reuters reported. If the vote fails and the proposal hits the dust chances are more that the troika of lenders would turn their back on Greece.

To finance its needs and to fill its coffers Greece would then have to exit Euro killing the currency union and its spirit by resurrecting Drachma. Greece would then rather be a part of problem than solution. The consequences of Greece s exit cannot be predicted: analysts use the word catastrophe to describe a less Europe situation. Moreover if Greece exits from the currency union attention will be shifted to Italy Portugual and Spain whose debt yields would then be taken to unsustainable levels resulting in a total collapse of the union as both countries too would have to follow the example set by Athens. It all depends on the vote which is expected to be passed on a tight note on Wednesday. Vote fails gold gains and vice versa.


Add a new comment