Gold hits new high as fear stalks financial markets

Gold has reached $1 921.41 per ounce and FTSE stages ‘marginal’ recovery as double-dip recession fears send Japan’s Nikkei index falling 2.2% to a six-month low

Gold hit another record high on Tuesday as the escalating eurozone debt crisis and predictions of a deep global economic downturn stalked the financial markets.

The spot price of gold hit $1 921.41 per ounce, as double-dip recession fears sent Japan’s Nikkei index falling 2.2% to a six-month low. Traders said that the gold price was back on track to hit $2 000 this year.

Italian and Spanish government debt also remained under pressure, after their bond yields rose closer to the danger zone this week. World Bank president Robert Zoellick added to the sense of alarm by warning that the European economy was entering a “particularly sensitive time”.

“We are moving into a dangerous period,” said Zoellick, speaking on Bloomberg TV. He also warned that the drive to cut national deficits across Europe could sink the region’s economic recovery.


“Sometimes people hope that you can muddle through by providing financing and liquidity — They now recognise that’s not going to happen and instead what you see is with some of the weaker economies, that the austerity policies are pushing them into slower and slower growth and so this could be a downward spiral,” Zoellick said.

Uncertainty over Greece’s second bailout, protests against Italy’s austerity programme, and German opposition to the European rescue package all weighed on the markets.

“The deteriorating fiscal situation in Europe continues to spook investors, with continued political discord amongst EU leaders making the likelihood of a quick solution pretty nigh on impossible,” said Michael Hewson, market analyst at CMC Markets.

European stock markets opened slightly higher after Monday’s sell-off which wiped nearly £50-billion off the FTSE 100. In London, the FTSE 100 jumped 39 points, or 0.7%, to 5141 in early trading. Josh Raymond, chief market strategist at City Index, said Tuesday’s early rise was only a “marginal” recovery after Monday’s 189-point plunge.

There was little respite for Europe’s weaker nations, with the yield on Italian 10-year government debt rising to 5.58%, with the Spanish equivalent hitting 5.29%.

Investors will be watching the situation in Italy closely, where Silvio Berlusconi’s government is presenting parliament with an emergency budget that aims to cut the Italian deficit by €45-billion by 2013. Unions who oppose the austerity measures are holding a nationwide strike, disrupting flights in and out of the country. —

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Advertising

Eastern Cape schools to only open for grades 3, 6...

The province says the increase in Covid-19 cases has made it re-evaluate some decisions

Malawi celebrates independence day, but the first president left his...

The historical record shows that Malawi’s difficulties under Hastings Banda were evident at the very moment of the country’s founding

Gauteng health MEC Bandile Masuku’s first rule: Don’t panic

As Gauteng braces for its Covid-19 peak, the province’s MEC for health, Bandile Masuku, is putting his training to the test as he leads efforts to tackle the impending public health crisis
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday