PRECIOUS-Gold hits near 1-month high on Cyprus debt fears

Thu Mar 21, 2013 1:10pm EDT

Related Topics

* Safe-haven bids lift gold, silver as Wall St down
    * EU gives Cyprus ultimatum, euro exit seen possible
    * Gold on track to rise five out of six sessions
    * Coming up: EU gives Cyprus until Monday to raise fund for

    By Frank Tang
    NEW YORK, March 21 (Reuters) - Gold rose to a near one-month
high on Thursday, as safe-haven buying emerged after the
European Union gave Cyprus an ultimatum to raise billions of
euros it needs to clinch a bailout deal or face a likely exit
from the currency zone.
    The metal has risen in five of six sessions on resurgent
fears about euro zone debt fears, and on hopes that the U.S.
Federal Reserve will maintain aggressive stimulus to battle
still-high unemployment. 
    Silver also rose 1.5 percent, on track for its biggest
one-day gain in almost two months.
    The European Central Bank said it would cut off liquidity to
Cypriot banks and a senior EU official said the bloc was ready
to see the bankrupt island banished from the euro zone. Earlier
this week, global markets slid as Cypriot lawmakers rejected a
plan to tax bank deposits to repay debt. 
    "The Cyprus situation has ignited purchasing of gold from
the public who are now becoming concerned that the same can
happen where they live," said Miguel Perez-Santalla, vice
president at online precious metals exchange BullionVault.
    Spot gold rose to $1,616.36 an ounce, its highest
since Feb. 26. It was later up 0.4 percent at $1,612.86 by 12:46
p.m. EST ( 1646 GMT).
    For the week, gold is set for a gain of 1.4 percent, which
would be its biggest one-week rise since November.
    Technical analysts said gold looked set for more gains after
it broke above $1,613, a downward trendline resistance on daily
    U.S. gold futures for April delivery gained $4.60 to
$1,612.10, with trading volume on track to finish below its
150-day average, preliminary Reuters data showed.
    Safe-haven bids were evident as U.S. equities fell while
investors kept an eye on events in Cyprus. Wall Street declined
as weak technology stocks overshadowed a batch of data
suggesting U.S. economic recovery was on the right track. 
    However, analysts said weakness from wider markets related
to uncertainty surrounding Cyprus could also pressure gold as
they sold bullion to cover losses elsewhere.
    Gold's 12-year bull run has benefited in the last three
years from the euro zone crisis. In September, 2011, fears about
Greece's debt problems sent bullion to its record high of $1,920
an ounce while equities plunged.
    Holdings of SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, stood unchanged from a day
earlier at 1,222.162 tonnes on Tuesday. The ETF on Monday posted
its first daily inflow since early February.
    Silver, which is widely used in industrial applications,
outperformed gold after data showed a pickup in the growth of
China's vast manufacturing sector. 
    Spot silver gained 1.4 percent to $29.17.
    Among platinum group metals, platinum rose 0.1
percent to $1,576.24, while palladium was down 0.2
percent to $755.25.
    Investors now digested news Switzerland's palladium exports
jumped last month to its highest since September 2008.
 Prices at 12:46 p.m. EDT (1646 GMT)                        
                               LAST      NET    PCT     YTD
                                         CHG    CHG     CHG
 US gold                    1612.10     4.60   0.3%   -3.8%
 US silver                   29.160    0.343   1.2%   -3.5%
 US platinum                1581.00    -1.50  -0.1%    2.7%
 US palladium                758.00    -0.20   0.0%    7.8%
 Gold                       1612.86     6.97   0.4%   -3.7%
 Silver                       29.17     0.41   1.4%   -3.8%
 Platinum                   1576.24     1.74   0.1%    2.5%
 Palladium                   755.25    -1.75  -0.2%    7.6%
 Gold Fix                   1613.75     5.00   0.3%   -3.0%
 Silver Fix                   28.91     1.00   0.0%   -3.5%
 Platinum Fix               1583.00     1.00   0.1%    3.9%
 Palladium Fix               761.00     2.00   0.3%    8.9%
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Comments (1)
Duffminster wrote:
Is it any coincidence that the IMF chief Lagarde is being raided and Bernanke is talking about stepping down after this term in conjunction with the Cyprus fiasco? The IMF’s catastrophe in Cyprus has put into jeopardy every single dollar that major US and European central banks have put towards maintaining sovereign solvency and the perception of stability and the rule of law and order. When the IMF tells Cyprus to ‘Go to hell,’ they have said , ‘Go to hell’ to whole world by extension. Bernanke knows that this massive perceptual change could indeed undermine the efforts to bring a sense of stability, trust and continuity in an environment of precarious economic and financial markets and societies. Its probably why he wants out.

Essentially the EU is blacking mailing the Cypriots and that is making everyone nervous because if it can happen in Cyprus it can happen anywhere. If government has reached the point that they will actually resort to stealing from depositors in one EU nation, then they may do it anywhere. The precedent, once set, becomes the norm. At that point, the rule of law has been violated and any semblance of stability is abandoned. This is pure stupidity.

Mar 21, 2013 3:22pm EDT  --  Report as abuse
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