Tuesday, February 21, 2012

Price of Gold will Shine Again

Gold price rises today as China's move to reduce the capital adequacy ratio of banks to stimulate economic growth, while European policy makers closer to agreement on aid to Greece. The spot price of gold rose 0.8% to U.S. $ 1,736.95 per ounce, and traded at U.S. $ 1735.75 - 9:37 pm Singapore time. The price of gold bullion for delivery in April rose 0.7% to U.S. $ 1,738 per ounce at the Comex in New York. Spot gold with a purity of 99.99% on the Shanghai Gold Exchange rose 0.3% to 353.30 yuan per gram (U.S. $ 1744.53 per ounce).

At the close of the weekend, precious metals prices were little changed as Greece and creditors are trying to reach an agreement on the terms necessary to secure the aid package of 130 billion euros or the equivalent of U.S. $ 172 billion.

Positive performance of commodities is indicated today after shocking steps at the weekend. At the end of last week, gold price traded with not much recorded change as Greece and its creditors are still trying to find a solution to the second bailout plan for Greece.

European finance ministers meeting in Brussels today to reconcile the demands made by the leaders of Greece, the debt swap between private creditors and the role of the European Central Bank.

In China, the central bank said the proportion of money lenders must set aside, known as the capital adequacy ratio, will go down a half percent from February 24. That makes the dollar lower against most of the 16 major currencies today.

There are several factors that led to rising gold price today. First, China cut the reserve requirement (GWM) banks to boost growth. Second, investor optimism that EU leaders would approve a bailout for Greece. This is then led to a weaker of U.S. dollar.

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