Precious metals were weak today with gold slipping below US$1,150/oz amid heightened uncertainty over Greece’s debt situation after Germany said it would provide money for the debt laden country for the sake of supporting the euro, but only if certain conditions were met.
The anxiety over the possibility of a Greek default strengthened, causing yields on Greece’s two year bonds jump to 13.5%. Tensions calmed earlier this month and the European Union and the International Monetary Fund (IMF) agreed to provide Greece with a €45 billion loan facility as a last resort to save it from bankruptcy. Last week, the country requested aid after its bond yields soared on Eurostat’s announcement that Greece’s 2009 budget deficit was revised from 12.9% of the GDP to 13.6%, causing rating agency Moody’s to cut its sovereign rating from A2 to A3 and leave the door open for further downward revisions.
The news weighed down the euro and boosted the US dollar to pressure gold. The yellow metal is seen as an investment alternative to the US dollar and usually moves inversely to the greenback.
Gold retreated to US$1,149/oz, while silver and platinum moved down to US$18.14/oz and US$1,722/oz respectively.