GOLD BULLION rose near 4-week highs against the Dollar and 3-week highs for Euro investors Tuesday morning as world stock markets ticked higher following a fresh government-backed bail-out for Italy’s banks, now facing bad debts worth €360 billion.
Eurozone bail-out talks with Greece were meantime suspended as the International Monetary Fund and Berlin continued to disagree over the possibility of reducing Athens’ total repayments to some creditors.
Major government bond prices eased back as bullion jumped, nudging 10-year US Treasury yields higher again from last week’s 2-month low of 1.70%, while the US Dollar rallied from a sudden new 6-month low against the Euro hit overnight on the FX market.
Gold priced in Dollars traded above $1260 per ounce for the first time since 18 March, while Eurozone investors saw wholesale bullion reach €1106 – almost 4% above start-April’s low.
Silver prices also shot higher and faster again, jumping 5.4% for the week so far to touch their highest level since October at $16.19 before retreating 10 cents per ounce.
“Up move resumes [in gold bullion],” says the latest weekly technical analysis from Karen Jones at German financial services group Commerzbank, setting a target of $1283 per ounce “[and] then the 55-week moving average at $1329.
“Key support is regarded as $1192.”
Gold: is staging a recovery after hitting key levels of 1206. Short-term pause, if any, should be cushioned at 1242/38.
“Stabilization signals panned out in gold,” agrees French investment and bullion bank Societe Generale’s head of technical analysis Stéphanie Aymes, pointing to “the graphical floor of $1206.
“Immediate downside should be cushioned at $1242.”
Base metals meantime rallied hard from Monday’s sharp falls, while oil broke back above $40 per barrel of US benchmark crude WTI.
New UK inflation data today gave the strongest reading in 15 months, buoying the Pound and curbing gold bullion priced in Sterling at £884 per ounce – still the sharpest major currency gain for gold so far in 2016 at 22%.
Italy’s banking rescue will see a new private-sector vehicle, Atlante, run by asset management company Quaestio to buy “junior tranches” – meaning the higher risk portions – of non-performing loans from Italian lenders.
“This is a very, very good step in the right direction,” one distressed-debt fund manager told Bloomberg TV, but “I don’t think €5 billion is enough.
“The problem really is how to solve legally the non-performing loans.”
The deal also “risks compromising the banks that are already in a much better shape,” adds investment consultant Francois Savary at Prime Partner in Geneva, speaking to Reuters.
