Gold News & Info

Source: American Gold Exchange

Austin— Gold dipped slightly as stalled eurozone debt negotiations weakened the euro and spurred a minor rally in U.S. dollar. Gold's first losing session in four was also, in part, the result of profit-taking after whopping gains of more than 4% last week. Nonetheless, it closed near its seven-week high, bolstered by growing investor demand. According to Reuters, gold investors increased their non-commercial Comex holdings for the third week in a row, their longest stretch in six months, while gold ETFs added 200,000 ounces last week, the most since December.

At the Comex close: April gold slipped $1 to $1,734.40; March silver dropped 26 cents to $33.53; April platinum lost $6.70 to $1,616.30; and March palladium slid $1.65 to $688.50 an ounce.

In their first major summit of 2012, European leaders squabbled today over balancing austerity measures with growth as they prepare to launch a new bailout facility, the European Stability Mechanism (ESM), sometime this year. Unlike the Long Term Refinance Operation (LTRO), which must be renewed every three years, the ESM will be permanently funded with 500 billion euros ($661 billion) to start. Struggling eurozone nations are likely to need every penny. Negotiations on Greek bonds hit another quagmire today while yields on 10-year Portuguese bonds rose above 17.25 % for the first time, and Portuguese credit default swaps spiked to record highs, indicating a 70% chance of default within five years.

These developments weakened the euro and drove the dollar higher, which weighed on gold. However, gold is expected to recover quickly. It has been correlating more with risk over the past few weeks. And as noted by Edel Tully, UBS analyst in the London gold market, this "may well be a clue that investors have shifted gears and are now starting to put more conviction behind their bullish gold outlook."