Get more Mail & Guardian
Subscribe or Login

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. —

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Cabinet reshuffle not on cards yet

There are calls for the president to act against ministers said to be responsible for the state’s slow response to the unrest, but his hands are tied

Rwanda’s involvement in Ramaphosa phone surveillance will further strain relations

But experts doubt the South African intelligence community has the capacity even to establish whether Ramaphosa’s phone was compromised

More top stories

Sierra Leoneans want a share of mining profits, or they...

The arrival of a Chinese gold mining company in Kono, a diamond-rich district in the east of Sierra Leone, had a devastating impact on the local community, cutting its water supply and threatening farmers’ livelihoods – and their attempts to seek justice have been frustrated at every turn

IEC to ask the courts to postpone local elections

The chairperson of the Electoral Commission of South Africa said the Moseneke inquiry found that the elections would not be free and fair if held in October

Daily new Covid-19 cases drop, but recent civil unrest might...

Acting health minister Mmamoloko Kubayi says 120 private pharmacies were destroyed and 47 500 vaccines lost in KwaZulu-Natal

Western Cape closes roads to end deadly taxi violence

The closure of the Mbekweni/Paarl and Bellville route comes as negotiations between taxi operators fail and will affect thousands of commuters

press releases

Loading latest Press Releases…