Gold Up on News of Cyprus Bailout

Monday, 18 March 2013
Written by  Forbes
Published in European Economy
Gold was up to start the week as news came down that the European Union had to bail out banks in Cyprus and also planned to levy a tax on depositors as part of the rescue package. News of this trickled down to the market and sent gold up to start the week. The dollar index and U.S. Treasurys were also higher.

Fiscal-Cliff

Comex April gold futures were up by double digits ($12.40) to come in at $1,605 an ounce and hit a peak of $1,607.60. That was their strongest level since Feb. 27, while industrially oriented metals like platinum and copper were on the defensive. Silver, which is both an industrial metal but also often bought as a safe haven like gold, was caught in the middle and nearly flat, with the May futures down 0.6 cent to $28.845 an ounce. The June S&P 500 was 13.10 points lower to $1,540.50.

Gold climbed back over that psychologically important $1,600 per ounce price mark for the first time in quite some time. For whatever reason, when the yellow metal trades above $1,600 more investors and traders become interested.

The bailout news also sent plenty of people in a tizzy to find a safe haven, which of course gold and silver fall under. Both precious metals are excellent safe haven spots for people to put their money to keep safe.

“As people start to worry about the safety of their deposits, gold would become an attractive alternative and an escalation of these worries would prompt a return of fear-related physical buying. With gold’s correlation with risk and the euro currently in negative territory, the yellow metal looks well positioned to rally on the back of recent eurozone developments,” Teves said.

We will see what gold does the rest of this week and see if this news will play into gold jumping throughout the week, or if this was just a one day jump according to the Cyprus bailout news.

“We are … somewhat surprised to see gold trading as relatively poorly as it has since its opening in Asia earlier today when spot gold traded to $1,608 very briefly. Given the Cyprus circumstance, we thought that gold would open in Asia at or above $1,610 compared to Friday’s close at or near $1,590 and that it would never look back. Given the situation, and given the flight of capital from Europe that has to obtain, gold should still become strongly bid for; but clearly there is someone or something offering gold in size at the $1,605-$1,610 level,” Gartman said.

Original Article: Forbes

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