Gold price holding well above its 200 daily moving average as Spain regions keep calling for bailouts
After last week’s range-breaking rally the gold price this week seems keen on holding onto those gains.
Whilst the gold price has drifted lower after touching $1672 at the start of the week there doesn’t appear to be much conviction in the selling. The 200 daily moving average is around the $1640 level, some $20 lower than where we are today.
As the final summer week plays out this week it would seem that people’s attention is once again turing to the troubles in Spain. At the start of the week the region of Catalonia requested some €5bn in bailout money from the Spanish government.
And today we got another region, this Valencia, asking from some €3.5bn in bailout funds from the Spanish government. This wont be the last region to request help either.
So the broke regions are asking the broke government for more money – rather laughable really, but the only real way they will be able to fund these request to the regions is if the Spanish government themselves get a bailout courtesy of the ECB – something the ECB has said it will do as long as there is an official request for the cash.
The trouble is as soon as the request for cash is made it will come with some pretty big conditions attached – just ask Greece how that is working out for them.
Add into the mix that some 5% of all bank deposits (a record) were withdrawn in July and the great summer can-kick to allow the Eurocratti the month of August to work on their tans, is rapidly coming to a very bumpy end. And a result Spanish borrowing costs have been on the rise again this week, bringing the day that Spain asks for help themselves ever closer.
Gold investors should certainly raise an eyebrow or two with the news that some 5% of Spanish Bank deposits have been taking out of the banking system. Where is this money going? Of course there is the good old faithful mattress, then there is Swiss bank accounts (an option not really open to the masses however), but the point is that this money has to go somewhere and it is in search of a very ‘safe’ home. The obvious place that a lot of this cash will end up is gold, and this process is something that is at is very infancy in size and will only go to grow and spread much further afield than just Spain - and that influx of cash can only mean one thing in terms of gold prices.
- Gold Price Update: 200 Daily Moving Average
- Gold price retests the 150 daily moving average
- Gold price back above its 200 daily moving average – thank-you Mr Bernanke
- Gold price falls to $1645 level – trading back below the 200 daily moving average
- Gold price falls back to its 150 daily moving average… again
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