The Daily Nugget: Gold Price And The Greek Tragedy

This morning the gold price has slipped slightly as the euro-dropped to a two-month low against the US dollar. Usually the euro and gold have a positive relationship however this seems to breaking away as both eurozone and US troubles rapidly snowball.

Analysts are also blaming the small drop in the gold price on those who were disappointed the yellow metal failed to break through $1,738 yesterday, and as a result began selling.

Greek Tragedy
Whilst Greek ministers have agreed austerity measures and a new budget for next year, they haven’t quite managed to get their hands on the eurozone’s cash just yet. When it comes to releasing funds, eurozone ministers have asked for a few more conditions to be met first. They will meet again next week to reassess the situation. Greek ministers have warned the country will run out of money in a matter of days.

Finance Ministers from on high in Brussels yesterday agreed to extend the period in which the Greeks must reduce their budget deficit, from 2014 to 2016. However cracks are emerging between Greece’s lenders, with some seeing the situation in a slightly more gloomy light than others.

But what could one expect with so many parties each with different motives? You have the eurozone lot trying to protect the dignity of the euro, alongside eurozone central bank leaders such as Wolfgang Schaeuble trying to protect his own country’s dignity whilst the Greeks try and carry on as if nothing’s happened and hope it might go all blow over (with a huge bailout).

Weak data good for gold investment
With just seven weeks for Obama to solve fiscal cliff issues all eyes are on the raft of economic data which is set to be released this week. Yesterday was quiet thanks to a national holiday but later this afternoon we will see both consumer and business confidence data releases, as well as updates from the Redbook and ICSC on retail sales.

The week didn’t get off to a great start yesterday as data releases from Japan showed the economy continues to shrink with little sign of improvement.

This morning inflation figures for the UK have been released, all of which show an increase inflation, something which is apparently "bullish" for the Great British pound. Tell that to the millions of parents starting their Christmas shopping this month as their little darlings write endless lists to Father Christmas.

Yesterday’s annual LBMA conference kicked off in Hong Kong with the director general of the PBOC reaffirming China’s desire to introduce more gold products into the system. Murmurs of competition with the US’s reserve currency are once again heating up. More on this later in the day, but interesting developments given the current leadership changes in China.

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