Gold advances on renewed fears of a Greek default

Gold surged today after opening the session, extending the gains recorded in the past sessions, affected by renewed fears and jitters regarding Greece, especially after the country had to apply further austerity measures to reach the budget deficit target set by international lenders, which supported demand for gold as a safe haven, especially after the huge losses seen in equities today and on Friday.

Gold opened the session at $1617.90 per ounce, and then recorded a high of $1652.50 and a low of $1617.90, and is currently trading around $1649.85 per ounce.

The Greek government pledged to apply 6.6 billion euros austerity measures including public workforce cuts in order to lower the budget deficit in 2012 to 6.8% of the total GDP, noting that international lenders' target is 6.5% of the total GDP, which means that Greece is missing the targets and could fail to obtain the second bailout package and also the next installment of 2010's bailout package due in October.

Inspectors of international lenders returned to Greece recently to review the measures done by the Greek government to become eligible for the next tranche, and approved on the new measures to control the budget deficit. In addition, European finance ministers are to gather in Luxemburg today, to discuss the enhancement of the European rescue fund (European Financial Stability Facility) and the risk of a Greek default.

Moreover, heavy fundamentals are to be released today, related to the performance of the manufacturing sectors in the European region, where Switzerland released the PMI manufacturing, which showed contraction in the manufacturing sector to 48.2 from 51.7, awaiting the manufacturing data from Germany, the euro zone largest economy, the United Kingdom and the Euro zone, which all expected to contract as the European debt crisis has pressured growth and reflected negativity in markets.

Furthermore, metals could fluctuate heavily during this critical week, awaiting the European Central bank rate decision, the Bank of England rate decision and the Reserve Bank of Australia rates and the European finance ministers meeting, in addition to the jobs report from the world's largest economy.

Among other precious metals, silver gained positive momentum to recover the losses seen on Friday, where the metal opened the session today at $29.66 per ounce, and recorded a high of $30.85 and a low of $29.58, and trades now around $30.60 an ounce.

On the other hand, platinum declined after the opening of $1530.00 per ounce, to reach a low of $1506.00; the metal trades now around $1521.00 per ounce.