Tuesday, May 18, 2010

RISK IS BACK Update I

At least for a few minutes...Let's see what the ponzi brings today but it looks like blue skies and sunshine for now.

Reuters) - Gold eased in Europe on Tuesday as assets seen as higher risk like stocks and the euro rose on hopes euro zone officials are making progress on a package of measures to resolve the euro zone's debt crisis.

Spot gold was bid at $1.213/75 an ounce at 0951 GMT, against $1,223.00 late in New York on Monday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $13.70 to $1,214.40 an ounce.

Concerns that the fiscal problems of debt-laden Greece would occur elsewhere in the euro zone drove gold to a record $1,248.95 an ounce last week and knocked other assets. That situation has since reversed, analysts said.

"Gold was definitely in overbought territory, because people were afraid," said Commerzbank analyst Eugen Weinberg. "Fears were fueled by problems surrounding the Greece crisis. (But) at the moment risk appetite is coming back to the market a little."

"The dollar is weaker, and the gold price as well, because they were both seen as safe havens and until recently profited from this status. With the return of risk appetite, it's logical that they are both under pressure."

The markets are awaiting the outcome of a meeting of euro zone finance ministers later on Tuesday, at which the officials aim to iron out wrinkles in a multi-billion euro rescue plan they unveiled a week ago.

The euro rose 0.2 percent against the dollar in early trade, while European shares climbed after a rally on Wall Street. .EU

update I from goldseek today
Gold - Very Short-term

As Greece receives the first chunk of $25 billion rescue package the gold and silver markets have moved onto consolidation mode for the time being. It’s difficult to say how long this will last, particularly because these are structural problems facing the market. The $ Foreign exchange markets are taking the € up over $1.24 again and so the $ and gold are moving together. It is unlikely that professionals will give any coupling of gold to any currency after these moves. With central banks intervening in the currency markets in an attempt to stabilize them, professionals are taking a ‘let’s wait for the next move attitude’, for now. With no confidence returning as yet, the markets are very nervous and volatile. This is no place for widows and orphans!



Once the markets are calm, underlying trends will return to dominate the market flows, together with the usual ebbs and flows as we are now seeing.

Silver – Very Short-term

Silver slipped back under $19,00 and is consolidating today. It’s time to build direction in a consolidation phase, like gold. Silver will remain the shadow of gold and continue to ride in tandem with it. It will continue to rise faster and fall further than gold, going forward. It’s a good time to re-assess before the next move. [Subscribe through www.SilverForecaster.com].



Gold Price Drivers

The € is looking battered and sad. While a recovery may restore emotion, it won’t restore faith. One danger is that holders of the € may test the resolve of European central banks and unload their Euros. The more they sense central bank support, the more they will unload. Let’s see if this happens? If so, the € will limp away.



Will European central banks resort to selling gold? [See above – newsletter features]



In the Far East both Indians and the Chinese watch for the right entry points, not the goings on in the West. Indians are hoping for a fall in prices, but the Chinese are only pausing at the moment.



We note that talk of a Persian Gulf single currency has returned to the horizon. If so this will create $ turmoil!

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