EUROZONE DEBT CRISIS ‘COULD LAUNCH GOLD TO $2,000’

by Goldline.com | November 10, 2011

Gold prices are lower on the New York Spot Market as of 12:19 p.m. EST as investors took profits to cover losses from Wednesday’s sell-off in U.S. equities and worries about a disordered bankruptcy in Greece and a deepening debt crisis in Italy weighed on market sentiment. "Broader trading is jittery but gold is more supported," said analyst Andrey Kryuchenkov of VTB Capital to Reuters. "If the dollar weakens and the broader market is more risk-friendly gold will track it. If uncertainty remains, gold will be supported by safe haven buying." (Reuters, 11/10/11)

Stocks are rallying on Wall Street. Italy's borrowing costs have surged in recent days and today brought a rise in French bond yields which jumped 3.4%. The rise in yields was prompted by concerns that France’s credit rating could soon be downgraded. "The spinning globe continues, and today, the finger has landed on France," said Joe Saluzzi, co-head of equity trading at Themis Trading to CNN Money. "There's a lot of disagreement among European officials on how to deal with this crisis," said Saluzzi. "Investors see that there's no united front, and that weighs on confidence and makes markets nervous." (CNN Money, 11/10/11)

Jesper Dannesboe, senior commodity strategist at Societe Generale, told Trade Arabia today that the Eurozone debt crisis could send gold prices to $2,000 an ounce. According to Dannesboe, while no one is yet placing bets on what happens if the euro melts down, the market environment of moderately bad news is generally bullish for gold. Further, “…if real rates remain at current depressed levels it would imply a move above $2,000/oz is only a matter of time.'…,” said Dannesboe. (Trade Arabia, 11/10/11)

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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