Spot gold rose dramatically by 3.2 percent to a high of $1,599.66 per ounce thanks to word of an EU agreement to offer relief to banks in the Eurozone.
Alongside gold, silver and platinum also rose on the news that EU leaders will allow a rescue fund to exert more interventionary powers. Largely, gold has moved in synchrony with riskier assets, facing a fairly bullish mix of governments and central banks. Gold was also helped by a 9 percent boost in grains and other commodities as things improved overall following the EU deal.
Reuters quotes HSBC chief commodity analyst James Steel: “The gold rally is likely to continue because once again we held well above the $1,525 key support level, we’ve had rapid short-covering and now we have some physical demand. I don’t think the market will press prices significantly at least in the near term.”
In the EU discussions, Italy, Spain, and France withheld agreement on a $149 billion growth plan, while German Chancellor Merkel continued her frustrating and predictable game of denial, refusing to participate in any debt relief work.
However, not all is rosy–despite the quick rise, gold showed an overall 4 percent decline over the quarter, which is its worst performance (quarterly) since Q3 2008.
