Greece secures the second financial aid, gold record more gains
Greece has finally secured the second bailout package worth 130 billion euros to avoid default previously projected on March 20, raising optimism in the market and spreading relief across the board. However, investors are still weighing the Greek debt deal and the possibility that Greece may not be able to commit and implement the required reforms in the right time and therefore markets are split now whether the nation will handle the debt and cut the deficit or it will not reduce the deficit and the economy will remain weak in 2020 with 160% debt-to-GDP ratio.
Gold added today 0.35% or $6.15 per ounce to currently trade around $1741.10 per ounce after the opening of $1734.95 per ounce. The metal reached so far the highest at $1743.38 and the lowest at $1731.00 per ounce.
Markets are fluctuating heavily due to the unclear role of the European Central Bank, where according to the Eurogroup statement the profits on the Greek debt holdings will be disbursed to the national central banks, which in return will channel them back to their governments according to each nation's procedure; however reports mentioned nothing regarding channeling them back to Greece.
For gold, the metal is also fluctuating today; however, it is biased to the upside as the tension and uncertainty in the market forced investors to hold more of the shiny metal as a hedge against uncertainty in order to protect their wealth.
The euro-area finance chiefs agreed yesterday to hand Greece the second bailout package approved in October 2011, in attempts to support Greece to cut the euro zone's largest amount of debt-to-GDP ratio to 120.5% from 160% by 2020.
Accordingly Greece is expected now to avert default in March, where the nation should return 14.5 billion euros of maturing bonds; however, after the agreement was reached yesterday a relief rally crossed markets as the bond-redemption process was restructured.
The private sector agreed to take losses of 53.5% in the exchange of their current bond holdings with the new longer-maturity bonds, which are expected to return 3.75% coupon rate.
Among other precious metals, silver also inclined today after the opening of $33.58 per ounce, where the metal added so far 0.67% or $0.22 per ounce to hover now around $33.80 per ounce. The metal set a high of $33.89 and a low of $33.44 per ounce.
Platinum also surged today, advancing 0.94% or $15.50 per ounce, after recording the highest at $1665.00 and the lowest at $1642.50 per ounce, reaching now around $1662.50 per ounce, noting that the metal started the session at $1647.00 per ounce.
Palladium gained 0.46% or $3.22 per ounce to $698.50 per ounce, after the opening of $695.28 per ounce. The metal set so far a high of $698.85 and a low of $694.00 per ounce.