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Gold News – Monthly Market Update November 2011

 

Gold finished the month a little better than at the end of October, managing to post a modest gain of just under 1.5% on the month

The month started with strong gains made as the the surprise announcement of a referendum – on the Eurozone bailout plans – by Greek prime Minister Papandreou spooked equity markets. German and French leaders were furious at the decision, which seemed to throw the whole future of the EFSF and the Eurozone into doubt.

Chinese economic data continued to slip, with manufacturing numbers coming in weaker than expected and causing further angst to world markets. Debt problems are seen to be holding back global economic growth.

Some respite from falling equity prices was given when Papandreou reversed the decision for a referendum, instead opting for a vote of confidence within the Greek Parliament: a decision highly prompted by other European leaders. Later in the month he won this vote, but only after promising to step down.

Market watchers spread their field of focus and concerns over debt problems extended to Italy and beyond. Italy, said by Sarkozy to be “too big to fail” sees its bond yields rise to over 7% – the level considered to be critical. France is next on the list of targets, and sees its bond yields rise to historically high levels also. The ECB takes up the mantle of responsibility and begins to buy the bonds of indebted Euro member countries.

Many market observers have tried to convince markets that the European debt problems will be contained within the continent, but the ratings agency, Fitch, prompts market falls when it says that it believes a worsening of European sovereign debt will spread to American banks. This causes financial stocks and the wider market to fall, and gold follows suit as dollar cost issues take hold once more.

Through the second and third weeks of the month, investment markets fall relentlessly, extending loss after loss as Eurpoean leaders and world central banks fail to make headway to convince the markets that they have any feasible plan to tackle burgeoning debt and continued governmental overspending. Precious metals follow suit.

Toward the end of the month, the gold price rises as investors once more seek to place money in safe havens. Continuing European debt problems force equity markets lower into technically oversold positions, and gold takes advantage.


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