Spot gold price for Malaysia shot up to RM161.23/gram, breaching the RM160/gram barrier for the first time since late February 2013. The rise in Gold price today was a direct result from a surprise decision by Euro Zone leaders to provide a 10 billion euros bailout of Cyprus. The part of the rescue plan also involves implementation of taxation on bank deposits which will see citizens losing between 6.75% - 9.9% of their savings.
The bailout was deemed inevitable in order to prevent Cyprus from defaulting it's debts. The decision announced on Saturday caused stock markets around the euro zone to fall on the first day of trading and the euro vs the dollar fell to a 3 month low. German Bonds and Gold benefited from the lost of confidence among European investors as worries emerged on future possibilities of other bailouts.
Economist are also expecting the Feds to continue on the Quarterly Easing till the end of this year in a further bid to stimulate the fragile economy.
I expect that the gold price will continue to see recovery mainly due to sustained uncertainty and lost in investors confidence created from the bailout announcement.
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