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Market: NYSE
Sector: Gold Mining
EPIC: GLD
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Gold
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Gold is a chemical element with the symbol Au and the currency code is XAU. It is a highly sought-after precious metal which, for many centuries, has been used as money, a store of value and in jewelry. The metal occurs as nuggets or grains in rocks, underground "veins" and in alluvial deposits. Modern industrial uses include dentistry and electronics, where gold has traditionally found use because of its good resistance to oxidative corrosion.

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Gold finds support at $1,120 as euro gains on Portugals bond issue

10th Mar 2010, 5:29 pm
Gold finds support at $1,120 as euro gains on Portugals bond issue

Gold has been volatile today, mirroring movements in the currency markets, where the euro strengthened against the US to support gold above the US$1,120/oz mark. Europe’s single currency fell sharply against the greenback earlier in the day, weighed down by concerns over Greece’s debt problems after Prime Minister George Papandreou asked US President Barack Obama to help the country prevent the situation from worsening by cracking down on hedge funds and currency traders which he said contributed to the ongoing crisis.

Rating agency Fitch added to the jitters by threatening to downgrade another debt laden euro zone country Portugal from its current AA rating if its fiscal consolidation progresses too slow and proves insufficient.

The euro surged later in the day after Portugal conducted a successful bond issue to raise US$1.34 billion after introducing an economic austerity plan earlier this week. The issue was oversubscribed, just like in the case with Greece, which sold €5 billion worth of bonds last week.

The yellow metal is seen as a riskier investment alternative to the US dollar and usually moves inversely to the American currency.

Gold was negatively impacted by yesterday’s news from China, where Director of the country’s State Administration of Foreign Exchange Yi Gang said its investment in gold will now be limited due its inconsistency over the past 30 years that has reduced its appeal as a long-term investment.

China, which is the world’s largest producer and the second bigger consumer of gold behind only India, currently has US$2.4 trillion in foreign exchange reserves, including holdings of 1,054 tonnes of gold compared to holdings of 600 tonnes in 2003.

Gold stood at US$1,122/oz in late afternoon, while silver advanced to US$17.38/oz.

Platinum rallied, adding $10 to reach US$1,601/oz on demand from exchange traded funds.

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