Are gold and silver becoming more well known as the alternative for risk assets?
*Financial Times, by Jamie Chisholm, July 18, 2011
‘Risk assets weak as gold hits $1,600
Risk assets are starting the week on the back foot, with sentiment battered by worries over eurozone and US sovereign debt issues.
Global growth concerns are also overpowering any residual bullishness engendered by a generally positive start to the US second-quarter earnings season, as traders warily eye Friday’s publication of weak consumer confidence data for the world’s biggest economy.
The FTSE All-World equity index is down 0.7 per cent as European bourses see heavy losses. The FTSE Eurofirst 300 is off 1.1 per cent, with banks suffering as investors get the first chance to discount details of the latest European bank stress tests. ‘Underwhelmed’ by the tests’ toughness and disinfectant properties, appears to be the verdict.
Wall Street’s S&P 500 is sporting a fall of 0.4 per cent at the opening bell, with IBM likely to be the headline earnings report of the session.
Gold is signalling the anxiety stalking dealing rooms. The precious metal has hit another record at $1,602.86 an ounce, as investors seek alternatives at a time of fiscal uncertainty. Bullion is currently up 0.3 per cent to $1,597, while silver is selling for $40.28 an ounce, an 11-week high.
No deal on the US debt ceiling over the weekend means traders are having to price in the possibility of a default by Washington at the start of August. But while the lack of progress is certainly not helping to calm nerves, judging by the action in the US bond complex, few expect the worst scenario.”
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