{"id":29260,"date":"2012-04-24T10:03:24","date_gmt":"2012-04-24T14:03:24","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=29260"},"modified":"2012-04-24T10:03:24","modified_gmt":"2012-04-24T14:03:24","slug":"dutch-debt-on-edge-of-downgrade-central-banks-add-to-gold-reserves","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/04\/24\/dutch-debt-on-edge-of-downgrade-central-banks-add-to-gold-reserves\/","title":{"rendered":"Dutch Debt “On Edge of Downgrade”, Central Banks Add to Gold Reserves"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nTuesday 24 April 2012, 08.00 EDT<\/strong><\/p>\n

SPOT MARKET gold prices\u00a0climbed to $1643 an ounce Tuesday lunchtime in London \u2013 a 1.2% gain from yesterday’s low, but still below Friday’s close \u2013 as Eurozone concerns focused on the Netherlands after yesterday’s government collapse.<\/p>\n

Based on the PM London\u00a0gold fix,\u00a0gold prices\u00a0remain 3% below their 200-day moving average.<\/p>\n

Silver prices\u00a0rallied back above $31 an ounce by Tuesday lunchtime \u2013 though they remained around 2% off where they began the week \u2013 while European stock markets edged higher following Monday’s steep drop and commodities also made gains this morning.<\/p>\n

The Euro meantime regained a bit of ground against the Dollar, though remained below last week’s close, with the Federal Open Market Committee due to announce its latest monetary policy decisions tomorrow.<\/p>\n

“If the Fed fails to hint at more quantitative easing, we may see a sharp drop in gold prices,” says Hou Xinqiang, analyst at Jinrui Futures in Shenzhen, China.<\/p>\n

“With the Dollar being slightly stronger, there is no reason at the moment to be interested in gold,” adds David Wilson, metals research and strategy director at Citigroup.<\/p>\n

Since this time last year, the Dollar Index, which measures the strength of the Dollar against a basket of other currencies, has risen nearly 9%.<\/p>\n

Over the same period, sales of investment\u00a0gold coins\u00a0by the US Mint have fallen more sharply than those for silver, the\u00a0latest US Mint data shows.<\/p>\n

The Netherlands successfully sold \u20ac1 billion of 2-Year government debt \u2013 as well as a further \u20ac0.995 billion in 25-Year government bonds \u2013 at auctions on Tuesday, following the collapse of its government a day earlier.<\/p>\n

Average yields were little changed on previous similar auctions. The spread between benchmark 10-Year yields on Dutch and German government bonds however hit a three-year high Monday, as 10-Year bund yields fell to a record lows below 1.64%.<\/p>\n

The collapse of the Dutch minority government, after it failed to get backing for its austerity plans, “is clearly credit-negative for the Dutch sovereign,” says Sarah Carlson, London-based senior analyst at ratings agency Moody’s.<\/p>\n

“It generates both political and policy uncertainty.”<\/p>\n

“The Dutch are on the edge of a negative rating action,” said Chris Pryce, director, Western Europe at fellow ratings agency Fitch last week,\u00a0speaking to the Telegraph.<\/p>\n

The newspaper reports that the Netherlands has half a million homeowners \u2013 nearly 3% of its population \u2013 in negative equity. Dutch central bank governor Klaas Knot has warned that borrowing costs will rise if the country loses its AAA status, as its debt is not regarded by investors as a safe haven in the same way as that of Germany and the US.<\/p>\n

Here in the UK, public sector net borrowing was \u00a315.9 billion last month \u2013 up from \u00a315.1 billion in March 2011 \u2013 according to data published Tuesday by the Office for National Statistics.<\/p>\n

Excluding the effects of financial interventions \u2013 the government’s preferred measure \u2013 net borrowing last month was \u00a318.2 billion \u2013 compared to \u00a318.0 billion a year earlier.<\/p>\n

The March figures mean that borrowing as a percentage of GDP fell from 9.27% in the financial year 2010\/11 to 8.30% in 2011\/12. Preliminary first quarter GDP figures are due out Wednesday.
\n“They are making gradual progress in reducing the deficit,” says Royal Bank of Scotland economist Ross Walker.<\/p>\n

“[But] it’s going to get more difficult in subsequent years…we haven’t really had any significant current expenditure cuts.”<\/p>\n

Overall debt meantime rose from \u00a3905.3 billion (60.5% of GDP) to \u00a31, 022.5 billion (66.0% of GDP) in the year to the end of March.<\/p>\n

Gold prices\u00a0in India rose to their highest level in two months, India’s\u00a0Economic Times reports, hitting Rs 29,100 per 10 grams as many Indians celebrated the festival of Akshaya Tritiya, traditionally considered an auspicious day to\u00a0buy gold.<\/p>\n

Central banks worldwide added nearly 58 tonnes of\u00a0gold bullion\u00a0to their reserves last month, with\u00a0Mexico and Russia each buying over 16 tonnes of gold.<\/p>\n

Ben Traynor<\/strong>
\nBullionVault<\/strong><\/p>\n

Gold value calculator \u00a0\u00a0| \u00a0\u00a0Buy gold online at live prices<\/strong><\/a><\/p>\n

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.<\/p>\n

(c) BullionVault 2011<\/p>\n

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013 should you choose to act on it.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

London Gold Market Report from Ben Traynor BullionVault Tuesday 24 April 2012, 08.00 EDT SPOT MARKET gold prices\u00a0climbed to $1643 an ounce Tuesday lunchtime in London \u2013 a 1.2% gain from yesterday’s low, but still below Friday’s close \u2013 as Eurozone concerns focused on the Netherlands after yesterday’s government collapse. Based on the PM London\u00a0gold … <\/p>\n

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