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Gold Moves Lower on Greece Concerns

Release Date: 
Friday, February 10, 2012

Gold moved lower on Friday, led by a slide in the euro after a Greek party leader said he would not support the 130-billion euro bailout needed to avoid default. As of 8:40 Pacific Time, gold was trading at $1720.80 per ounce on the New York Spot Market, and silver was trading at $33.80 per ounce.

Greece is facing a sizable amount of bond redemptions in March and the country could default without a European rescue package. Greeceā€™s bailout is contingent upon politically unpopular austerity measures that have been difficult to negotiate. "While indications are that the Greek parliament will approve these measures, there is enough uncertainty to keep markets on edge as we enter the weekend," Standard Bank metals analyst Marc Ground said in a note.

Some analysts believe that Greece could be forced to leave the euro zone system. "Gold will rise to $2,500/oz and commodities will plummet if the euro area starts to break up," Capital Economics wrote on Thursday yesterday.

"Greece may leave the system this year, followed by Portugal and Ireland in 2013," said Julian Jessop, chief global economist at the macroeconomic consultancy, told a conference in London on Wednesday.

Gold and silver will rise, he said. "It's almost certainly bad for all commodities, excluding gold and perhaps silver as a safe haven," Jessop said.

(Sources: "Gold falls 1 percent as Greek bailout worries hurt euro," Reuters, February 10, 2012; "Gold Sinks 1.5% on Greece Concerns," Wall Street Journal, February 10, 2012; "Gold Will Advance to $2,500 If Euro Zone Breaks Up - Capital Economics," Gold Seek, February 9, 2012)

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