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Gold rallies after BoE's QE move, Greek austerity deal

9th Feb 2012, 4:11 pm by Sergei Balashov Gold rallies after BoE's QE move, Greek austerity deal

Gold prices rallied this afternoon as the euro surged against the US dollar, an alternative investment to the yellow metal, after Greek policymakers agreed on a new round of austerity measures.

Prime Minister Lucas Papademos managed to convince the leaders of three parties that support the ruling coalition to agree to further unpopular austerity measures, which include wage and pension cuts.

More austerity was demanded by Greece’s official lenders, the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) – collectively known as the Troika – as a condition of a €130 billion bailout.

Greece needs more financial aid to pay off a €14.4 billion bond due on March 20 and avert a disastrous bankruptcy, which could jeopardise the future of the euro zone.

Euro zone finance ministers will meet in Brussels today to decide whether to unlock the bailout.

Earlier in the day, the Bank of England announced the expansion of its quantitative easing programme by a further £50 billion to support the UK economy, which contracted 0.2 percent in the last quarter of 2011, and prevent a recession.

The move boosted gold’s appeal as an inflation hedge.

Gold traded at US$1,745/oz in early afternoon, up US$13 from Wednesday’s close. Silver rallied 22 cents to US$34.16/oz and platinum added US$1 to reach US$1,662/oz.

Today’s top risers in the sector were:

Angel Mining (LON:ANGM), up 8 percent at 2.4 pence at midday

Stratex International (LON:STI), up 7.5 percent at 9 pence

GMA Resources (LON:GMA), up 6.5 percent at 0.25 pence

Central Rand Gold (LON:CRND), up 5.5 percent at 1.27 pence

The top fallers were:

Norseman Gold (LON:NGL), down 13 percent at 6.12 pence at midday

Minco (LON:MIO), down 7.5 percent at 3 pence

Orsu Metals (LON:OSU), down 3 percent at 12.39 pence

Touchstone Gold (LON:TGL), down 2.5 percent at 19 pence

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