Will the European debt crisis keep the world's financial markets uncertain and volatile?
*Reuters, November 9, 2011:
'Gold edged higher on Wednesday on persistent doubts about Italy's
ability to tackle its debt crisis as political uncertainty and soaring
Italian bond yields prompted caution among investors.
Italian Prime Minister Silvio Berlusconi, viewed by many in the markets
as an obstacle to economic change, has pledged to resign after
parliament passes budget reforms but his exit as leader of the euro
zone's third-largest economy raised questions about a successor and
possible political instability.
A failure by Italy to fix its debt problems would have a far bigger
impact on the region than difficulties in Greece.
Spot gold rose 0.6 percent to $1,796.39 an ounce, from $1,784.85 late
in New York on Tuesday, just off Tuesday's high of $1,802.60 -- its
strongest since late September.
The euro slipped as the dollar rose across the board after the yields
on 10-year Italian bonds hit 7 percent, a level at which countries
including Portugal and Ireland were forced to ask for financial help.
Yields pulled back after the European Central Bank (ECB) intervened in
the markets.
The swift rise in bond yields prompted Paris-based clearing house
LCH.Clearnet to raise the initial margin call on Italian bonds,
effectively driving the cost of using Italy's debt to raise funds
higher.
'The market is extremely worried. Changing leaders both in Greece
and Italy doesn't change the fiscal situation and leaves us with a
period of uncertainty,'' said Ole Hansen, senior manager at Saxo Bank.
Keeping concern about the sovereign debt crisis alive, a plan for
former ECB vice-president Lucas Papademos to lead a Greek government of
national unity has run into trouble, party sources said, prolonging the
political hiatus as the country heads towards bankruptcy.
Gold hit a record around $1,920 in September on worries about a growing
debt crisis in Europe and is trading more than 25 percent higher in the
year to date.
Spot gold prices have rallied around 4 percent so far this month as
mounting doubts over the euro zone's ability to tackle its two-year-old
debt crisis drove investors to safe-haven assets and decoupled gold
from other commodities, which it had followed through much of the past
two months.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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