From Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n \nWorsening Euro Crisis Blamed on “Weak Dollar”<\/strong><\/p>\n <\/strong><\/p>\n \nTHE PRICE OF PHYSICAL<\/strong> gold bullion<\/a> rose to a 1-week high in Asian and early London trade on Tuesday, touching $1370 per ounce even as the US Dollar rose on news of South and North Korea exchanging shell-fire over the disputed border island of Yeonpyeong.<\/p>\n \nAsian stock markets dropped up to 2%. Crude oil fell hard towards $80 per barrel. Silver prices unwound Monday’s 2.3% rally.<\/p>\n \nThe Euro fell to $1.35 \u2013 and the gold price in Euros rose above \u20ac1000 per ounce \u2013 for the first time in five sessions as Sinn Fein called for the resignation of Irish premier Brian Cowen following the joint EU-IMF intervention in Dublin’s \u20ac90 billion debt.<\/p>\n \n“It seems that gold’s bull-run, which has lasted more than eight years, has gathered fresh momentum,” says the latest Metals Monthly<\/em> from the VM Group in London for ABN Amro Bank.<\/p>\n \n“The Fed’s second round of quantitative easing and the ongoing currency disputes will serve to enhance gold’s ‘trusted’ image.”<\/p>\n \nWorld Bank president Robert Zoellick last week called for some element of gold price reference in the global monetary system, notes VM, and “Such disquiet and attention is tailor-made for gold.”<\/p>\n \n“The Eurozone cannot live with a strong Euro,” writes Mansoor Mohi-uddin, managing director of currency strategy at Swiss bank UBS, in today’s Financial Times<\/em>, blaming the Federal Reserve’s second-round of quantitative easing for the current turmoil in Europe.<\/p>\n \nJust as the Euro became over-valued in mid-2009 thanks to the falling Dollar, he believes, so this month’s QE2 means lower export sales, lower growth forecasts, and thus a heavier debt burden for weaker Euro-union members.<\/p>\n \n“We don’t have the luxury of time” in accepting the EU-IMF bail-out, said Dublin’s transport minister Noel Dempsey this morning, rebuffing calls for an immediate general election.<\/p>\n \nEU economic commissioner Olli Rehn confirmed that it is “essential” Ireland’s emergency budget is passed before Dublin’s EU partners transfer the sums agreed.<\/p>\n \nA consortium of pension fund managers, insurance companies and private investors meantime challenged Anglo Irish Bank’s offer of 20\u00a2 in the Euro on their bondholdings, part of a \u20ac1.6bn buy-out offered by Dublin’s beleaguered coalition government.<\/p>\n \nMadrid today sold a little over \u20ac4bn in new debt, but only at sharply higher interest-costs from Spain’s most recent sale.<\/p>\n \nEuropean stock markets lost more than 1% by lunchtime.<\/p>\n \n“Gold remains a buy on dips,” says today’s note from Walter de Wet’s team at Standard Bank. “Not only do financial market conditions support gold investment demand, but the physical gold market also remains supportive.”<\/p>\n \nPrivate Indian demand to buy gold should “remain positive” throughout the current wedding season, says Standard, with the Western Hemisphere then celebrating Christmas and the Chinese New Year falling on 3rd Feb. 2011.<\/p>\n \nSovereign credit risk in Europe will meantime “provide investment demand for gold [and] combined with the physical market \u2013 which looks to provide support on dips \u2013 we believe gold in Euro-terms should outperform gold in Dollar-terms for the time being.”<\/p>\n \n“Deals are very limited today” however, a Mumbai bank’s Gold Dealer told Reuters earlier. “We haven’t seen big transactions so far” because a falling Rupee driving local Indian prices back above INR 20,000 per 10 grams.<\/p>\n \nOver in China \u2013 the world’s second largest private gold consumer \u2013 Beijing banned the hoarding of coal and oil in a bid to cut the 4.4% inflation rate, urging local officials to act with a “stronger sense of responsibility.”<\/p>\n \nBoth North and South Korea accused each other of firing first in this morning’s clash, but the United States called Pyongyang “belligerent” and UK foreign secretary William Hague said the North’s attack was “unprovoked”.<\/p>\n \nChina said it was “concerned” by the action. Russia \u2013 which yesterday announced raising its central-bank gold bullion<\/a> reserves to 774 tonnes, overtaking Japan in the world’s central-bank table \u2013 called North Korea’s attack “absolutely unacceptable”.<\/p>\n \nAdrian Ash<\/p>\n \nBullionVault<\/a><\/p>\n \nGold price chart, no delay<\/a> |\u00a0\u00a0 Buy gold online at live prices<\/a><\/p>\n \nFormerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash<\/strong> is the editor of Gold News<\/a> and head of research at BullionVault<\/a> \u2013 winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council<\/a> research body \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n