Gold continues the rise today on renewed fears after Moody’s decision
Gold prices rose today as the risk aversion returned to financial markets, and haven demand returned on concerns over the global economic outlook and the renewed fears about the Greek debt crisis, and Moody's Junk status for Portugal.
Gold opened today at $1515.50 an ounce recording the intraday high at $1518.55 an ounce and the low of $1511.97 an ounce and is currently trading around $1516.82 an ounce.
Gold inclined after Moody's Investors Services Inc. yesterday cut Portugal's long-term debt rating from Ba2 to Baa1, two steps into junk, with a negative outlook, citing growing risk that Portugal will require a second round of official financing before it can return to the capital markets.
As for Greece, after the euro area finance ministers approved their part of the July tranche, jitters eased slightly over the prospects for default; nevertheless, it was tempered by Standard & Poor's view on the private sector involvement in a second Greek rescue package, adding that the proposed debt rollover plan for Greece may still put the country in effective default.
Also, fears dominated the market after Moody's said that the amount of problem loans for local governments in China are more than expectations keeping the pressures on banks and fueling fears over the government's need to bailout the banking sector.
On the other hand, the dollar index, which tracks the dollar movements versus a basket of major currencies, is trading within a narrow range today as it opened at 74.62, recording the intraday high at 74.68 and the low of 74.45 and is currently trading around 74.63.
Alongside the prevailing haven demand on the metal, gold is on the rise alongside commodities since yesterday, especially trailing oil gains as investors start the third quarter with upbeat expectations for the recovery and positive outlook for demand prospects as the slowdown seems less severe than anticipated.
Today the U.S. ISM non manufacturing index for the month of June is due following the surprise strengthening expansion in the manufacturing sector, which will further support the commodities rally and the hedge and haven demand on gold. Eyes this week will be on Friday with the release of the awaited non-farm payrolls which will be the main sentiment breaker for the coming period, and especially for commodities.
Among other precious metals silver is also rising today as it opened today at 35.46 recording the highest at $35.92 and the lowest at $35.25 and is currently trading around $35.67.