Gold remains steady after Spain news
However, gold remained steady today as European ministers agreed on a $125 billion deal to aid ailing Spanish banks.
While the yellow metal was unable to move too far up in price, it did remain steady overall, as this piece of debt deal news is something that was needed.
Now we can only hope that the situation in Greece is resolved at some point in the near future, along with the rest of the troubles wracking the eurozone.
Spot gold didn’t change much at all, hitting $1,592.80 an ounce earlier today after having hit a high point of $1,607.95.
U.S. gold futures for August delivery were up $1.90 an ounce to come in at $1,593.30.
As you can see, even though there was some debt resolve news the overall price of gold was not affected all too much.
Even though the news of this debt resolve was good, there were also some disadvantages.
“A bailout for the European banks is a positive for the euro and in a way a positive for gold, but it may take some of the risk attraction of gold away, so there is some negativity there as well,” Mitsui Precious Metals analyst David Jollie said.
This risk attraction Jollie is speaking of is basically when people flee other investment sectors to gold in an attempt to put their money in a commodity which has historically held its value.
In that regard, it is quite similar to when people flee to gold when the Federal Reserve announces that they will inject more cash into the economy, which many simply refer to as “printing money.”
“For the other metals, it may be a bit more positive, in the sense that the euro crisis seems a little more distant,” he added. “But at the moment no-one is quite sure whether this is just pushing things down the road, or whether it is the start of a solution to the euro problem. That is the key question.”
So the negative is basically that most investors don’t know if this latest debt bailout is any indication of what may happen in the future of the eurozone.
However, the lack of a significant jump in price makes one think that they probably see a positive trend in this news.
The problem in Greece remains, and a $125 million dollar deal will not get anything done in Greece, as the debt level there is much worse.
Furthermore, it is unclear when or how Spain will ever pay off these debts, which is the same situation with Greece.
That being said, at this point all we can really do is hope that this is a step in the right direction.
Something like this could open up the lines of communication in the eurozone and allow for some sort of debt deal to get done before it is too late.
As it stands now, they only have a deal in place that pushes the inevitable back a bit, and some say that this collapse will happen sooner rather than later, sending shockwaves through the global economy.
Then again, people have been saying that for quite a while now and it has yet to materialize. Others say that this is because it is simply because they are propping up these economies with cash injections like we just saw in Spain.
The fact remains that Greece is still going to run out of money, and something needs to be done or it is going to affect every financial market in the world.
The above article is for informational purposes only and is not a solicitation by End the Lie or Goldco Direct. It is the commentator’s opinion only and not intended for investment recommendations, and does not necessarily reflect the views of End the Lie or Goldco Direct. Any references to outside sources are believed to be accurate. Past performance is not a guarantee of future results. All commodities involve risk. Investors should consult their financial adviser before making any investment decisions.