Gold firmed on Monday, rising towards $1,645 an ounce, silver up 0.5 percent at $29.86 an ounce

Gold firmed on Monday, rising towards $1,645 an ounce, as stock markets recovered from losses and the euro lifted from lows early in the day, while traders digested last week’s euro zone downgrades from Standard & Poor’s.

The single currency edged above the near 17-month low it hit against the dollar in early trade, while European stock markets swung into positive territory. Oil prices also tracked higher.

Spot gold was up 0.3 percent at $1,644.19 an ounce at 1208 GMT, while U.S. gold futures for February delivery were up $13.90 an ounce at $1,644.70. Prices are still up 5 percent this month, despite a fall of 0.6 percent on Friday as the euro tumbled after the S&P downgrade.

Gold’s relationship to bad news on the euro zone debt crisis has been choppy in the past year, with the metal sometimes benefiting from fears over currency debasement and sometimes falling victim to a rising dollar.

“Gold is not a hedge against problems in the euro zone, at least as far as the debt situation is concerned. That might look different in the worst case scenario,” said Peter Fertig, an analyst at Quantitative Commodity Research.

“Currently gold is moving along with … exchange rate movements, but also crude oil and stocks markets, particularly the S&P 500 index,” he said.

Stocks and the euro fell in early trade after rating agency Standard & Poor’s downgraded nine of the euro zone’s 17 countries on Friday, withFrance and Austria losing their top-notch status.

Mass euro zone ratings downgrades are unlikely to shake up investors too much, but with Greek debt talks at an impasse, pressure has been loaded on the bloc to build up its defences and last week’s glimmers of optimism have been firmly doused.

Talks between Greece and its creditor banks to cut back on its debt ended without agreement on Friday, pushing Athens closer to default. Greek Prime Minister Lucas Papademos said on Monday he was confident a deal on a debt swap plan would be reached.

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Posted by admin on Jan 16 2012. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry