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Gold Bullion to Benefit From Euro Lows

May 30, 2012 - The Euro reached twenty-two month lows last week, which gave a rise to gold bullion that managed to keep it off its primary correctional trajectory. There is no guarantee that the current action in its total will keep the gold market back on track for immediate gains and away from the strong fundamentals that ensure a correction in gold, but there is a strong indication that further problems out of the European Union will bring action to the gold market.

Gold has been relatively unpopular in the first quarter of 2012 as investors read somewhat optimistic economic news and pulled money from gold bullion in order to pursue riskier positions. Economic data including House Sales and the Jobless report have given many investors all the news they need in order to believe that a recovery is in effect and is bankable in terms of investments.

Lately, gold has cooled, somewhat, with gold falling by 1.3 percent last week despite a rise on Thursday and Friday. Silver was also down on the week and gold and silver ETF’s were also down.

Now, the news of the Greek exit from the European Union is bringing renewed interest to gold bullion as the currency, the Euro, is suffering at twenty-two month lows as investors front run a serious European problem. The action in the Euro already has been enough to reactivate interest in gold, though there has been nothing but news and hype out of the European Union. An actual market event, such as a Greek exit, will cause significant disruption in the market and that is enough to scare investors to take positions with gold now before such action is possible.

Gold is still in an overall bull market that is experiencing a correction, which will fundamentally hold true through this crisis. The troubles in the Euro, however, are enough to overshadow that dynamic. These many factors will continue to influence the gold market through the short term, which can be relatively tradable understanding.

However, in the event of a Greek exit from the Eurozone, there will be far greater market disruption that simply cannot and should not be projected at this time. Certainly, gold is one of the safest places to be in such a market event scenario, which is one of the best reasons why investors are flocking to gold bullion now and front-running the European problem.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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