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Gold Resumes Its Rebound, Yet May Face Downside Pressure

ByICN.com
Published 05/21/2012, 04:39 AM
Updated 07/09/2023, 06:31 AM
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Precious-gold continued its rebound on Monday, tracking the rise in the euro, after G8 leaders have vowed to keep Greece in the euro area. In the G8 meeting, world leaders focused on bolstering both and fiscal discipline while called for Greece to stay in the euro-zone.

The efforts done by global leaders managed to boost some confidence in investors which enhanced demand on commodities and the high-yielding currencies. However, the yellow metal may come once again under pressure amid political uncertainty in Greece and fiscal woes in Span, especially as G8 leaders to did not reveal how they can prevent a Greek exit from the euro area.

Last week, Greece had its long-term credit rating cut by one notch to CCC from B- by Fitch Ratings on the back of the political turmoil which is threatening the country's stay in the euro bloc.

In Spain, worries intensified after Moody's Investors Service cut Banco Santander, Spain's biggest lender, and BBVA credit rating by three levels on loan losses and anemic economic conditions. This week, eyes will track auctions from Spain, France, Germany and EFSF to see the effect of the undergoing tensions on the bond yields.

Gold is currently trading around $1593.10 an ounce after recording a high of $1599.35 and a low of $1590.51, where the shiny metal found is expected to face strong resistance at $1600 levels. Crude oil for June's delivery is currently trading lower around $92.05 a barrel from the day's opening of $91.34.

On the other hand, the U.S. dollar continued its drop against a basket of major currencies, where the Dollar Index is currently hovering around 81.10 compared to the day's opening of 81.19.

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