Gold advances on rising debt concerns recording new historic high
Gold inclined today continuing the upside journey, extending the gains recorded in the past sessions, driven by rising concerns in European regarding the sovereign debt crisis, which is deepening and extending, while fears are dominating the market due to the possibility of an expansion of the debt-crisis to other European countries and that Greece may default after Fitch provided more signs as the agency downgraded Greece's credit rating to the world's lowest rating ever and Moody's warned the U.S. of downgrade.
Today, the shiny metal set a new record of $1590.00 per ounce after the opening of $1582.07, recording a low of $1578.82, and is currently hovering around $1583.70 per ounce.
Gold rose more than $100 per ounce in two weeks amid the downbeat growth outlook in the globe, the deepening debt crisis in Europe and the heavy losses seen across the board in the past session, where uncertainty is the dominant and fears are wide spread in the market. These factors have supported the metal to trade higher as the appeal for gold as a safe-haven surged.
Moreover, the weakening dollar has eased the pressures forced on commodities and metals, where gold's demand increased after the low yielding currency reversed to the downside, which made the metal the only safe haven in the momentum.
The dollar came under pressure from Fed and Bernanke hints that they are ready to add more stimulus to support the waning recovery. AlsoMoody's Investors Services placed the US credit rating under review for a downgrade, adding more pressure on the U.S. government to raise the debt limit which is $14.3 trillion. Moody's is concerned that the debt threshold wont be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes.
Fitch rating agency followed Standard & Poor's and Moody's moves, to downgrade Greece's credit rating to CCC after the two agencies cut Greece's rating to CCC and Caa1 respectively in June.
Fitch explained that the downgrade came after the rising concerns in the market, where investors incurred heavy losses which awaits still the final vote on the new bailout package.
The debt crisis is deepening and fears are rising on the possibility of an expansion of the crisis to other European countries such as Italy. This has affected the metal to trade higher, while uncertainty is dominant in the market, and fears are spread for expectations that Greece may default, after the European finance chiefs had come to no agreement to provide further help to Greece in terms of a new rescue package, in addition Legarde, the IMF chief, said that the IMF and EU are not ready to discuss any new aid packages until Greece takes further steps towards solving their debt-crisis. Those factors have forced the metal to extend the gains and to record a new top.
Silver also extended the gains recorded in the past two sessions. After the opening of $38.13 per ounce, silver recorded the high of $38.83 and the low of $37.96 and is currently trading around $38.62 per ounce.
Platinum also inclined today to record the high of $1773.00 per ounce and the low of $1752.00 after the opening of $1753.00, the metal is currently trading around $1769.00 per ounce.