Gold Spreads Tumble $250 as EU Officials Discuss Bailout Leverage
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 26 September 2011
Financial spread betting markets are unsure of what to make of the weekend’s developments.
For more information please also see our feature, Gold Spreads Plummet as EU Leaders Discuss Leveraging European Bailout.
The markets do know one thing for sure; it will take months of further discussions to agree exactly one what to do. It will then take even longer for all the EU states to ratify whatever it is that’s agreed and most still haven’t done this with the July agreement to extend the fund.
As a result the FTSE has been yo-yoing throughout the morning having been above and below 5000 a few times already.
At the time of writing we’re just above there, but investors are still very much undecided as to whether anything has actually changed from last week.
The effect of this weekend’s IMF summit proved to have a major bearing on the Euro as it dropped to its lowest level last seen at the turn of the New Year.
The EUR/USD spread betting pair traded as low as $1.3362 this morning, as traders are really feeling the ongoing tension of the European debt situation.
The reality is that everybody is looking to the decision on Greece’s next round of its bailout package, and the longer it drags on, so does the nervousness.
Here’s an interesting fact for you; futures traders who trade the Euro versus the Dollar have increased bets that the pair will decline, according to figures from the Commodity Futures Trading Commission.
Saying all this, it currently looks like there is a small bear squeeze on the go and the Euro has moved higher to $1.3437. Many will be looking to this evening’s German survey of business conditions, which is likely to bear an effect on the single currency.
Gold is the fall guy today and, at the time of writing is at $1592, a good bounce off its lows from earlier though.
This $250 decline since Thursday has the feeling of a bubble being popped but even still the long term upward trend still remains intact.
The yellow metal was heading for its worse two-day drop since 1983. It’s a difficult one really, because when do you think enough is enough and buy the dip?
Either way, for most, it will always be seen as a safe haven, so who knows how much longer it will be before some think enough is enough and dip a small toe in?
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'Gold Spreads Tumble $250 as EU Officials Discuss Bailout Leverage' edited by SD, updated 26-Sep-11
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