GOLD STEADY AS U.S. RATING OUTLOOK CUT TO NEGATIVE

by Goldline.com | November 29, 2011

Gold prices are up $3.60 today on the New York Spot Market as of 8:50 a.m. PDT as the U.S. dollar fell on hopes that Europe may stem its debt crisis and ratings agency Fitch cut the U.S. rating outlook to negative. Gold was also supported by a stronger U.S. stock market, which reduced investor need to sell metals to cover losses. (Reuters, 11/29/11)

Stocks rallied on Wall Street, extending gains from Monday on optimism that Europe may finally address its debt crisis; however, “Nerves were strained after Moody's warned that 87 banks across 15 of the 17 Eurozone countries could face downgrades and Italy auctioned €7.5 billion of 3- and 10-year bonds that drew the highest yields in years. Borrowing costs in Italy have been above the uncomfortable 7% mark for days,” according to CNN Money. (CNN Money, 11/29/11)

The U.S. has lost its stable outlook from ratings agency, Fitch, which lowered the U.S. to negative on Monday. The rating cut follows the congressional committee’s failure to agree on deficit cuts. The cut reflects, “declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming,” according to the company. Fitch went on to say the cut makes the probability of a downgrade of the country’s AAA rating greater than 50 percent over two years. (Bloomberg, 11/29/11)

†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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