Gold bullion continues to hover around $1,650 per ounce this week. Meanwhile, the Euro has fallen to a new low as investors become concerned
about the rising borrowing costs of the Spanish government and the ability of the country to keep finances under control.

 

Gold contracts equal to approximately 7.3 tonnes changed hands on China's Shanghai Gold
Exchange in early Monday morning trading. Even though the average turnover is about half of
the 18 tonne daily volume exchanged a year ago, USB noted the current trading levels are not
necessarily weak. But, the figures do indicate China has less gold bullion fever than last year.

 

Concerns over Spain's upcoming bond auction has dampened investor's appetites for gold as they see the asset hurting the value of the Euro. And fears over Spain's ability to control its finances has caused the cost of insuring the country's debt to skyrocket, making investors additionally cautious.

 

Predictions from last week, stating gold should rise back to the $1,700 mark this week, have been squelched due to the slower than expected growth in China, the stronger United States dollar and the lower than expected demand from Indian jewelers.

 

The fall of the Euro, now at a two month low against the U.S. dollar and Chinese yen is blamed on the renewed concerns over the delicate state of Spain and the Euro zone economy as a whole. Concerns about the Euro zone was the major factor contributing to the rise of gold bullion prices, but the impact of the recovering dollar has now outweighed these concerns.

Location

London

Disciplines

• Business

Website

http://www.goldbuzzer.com