Gold hits new records after Bernanke’s testimony

In the Lead: “The Moody’s Blues: Tuesday Afternoon”

Metals markets opened firm and continued firmer on Wednesday as reverberations of the European crisis coupled with the parsing of the Fed’s meeting minutes released yesterday prompted additional buying by momentum players as well as the retail investor segment. Spot gold dealings opened their midweek session only some $3 beneath their previously set record and were showing a gain of $7.30 per ounce in New York. The tilt in the market appeared set to yield a challenge of that previous high and also appeared to leave open the potential for a vault to the $1,580 - $1,630 price band.

Silver commenced trading this morning with a 69-cent gain and an opening quote of $36.84 per ounce. As with gold, the breach of the $36.80 resistance point might now allow for a fairly quick rise towards the high $39s with a possible overshoot into the $41-43 area if conditions collaborate. Platinum and palladium were also higher- much higher-on the day as they opened for trading in New York. The former registered a $22 rise out of the starting gate; it was quoted at $1,751.00 per ounce. Palladium climbed $9 to the $774.00 bid level while no changes were noted in rhodium’s bid at $1,975.00 the ounce.

This was, once again, a case of “another day, another downgrade, another set of worries” for investors to contend with. The summer that is proving to be anything but full of lazy days continues to offer virtually daily doses of anxiety and uncertainty; not only about the present but also as regards the upcoming months and years. We start today’s roundup in – where else – Europe once again. Moody’s (becoming quite the household name in this summer of turmoil) downgraded Ireland’s credit rating to “junk” status yesterday afternoon.

The move may have been the “prudent” thing to do as regards the mission of a ratings agency, but it was met with far less than a sense of crying the blues by Ireland’s leadership in Dublin. The country’s Minister for Jobs, Enterprise, and Innovation flat-out accused Moody’s of holding back Ireland’s economic recovery with its assignment of the “junk” status. Expressing similar, deep frustration, Prime Minister Enda Kenny said this morning that the EU needs to get its act together and offer a comprehensive solution to the regional debt issue. “Moody’s problem is not with Ireland, Ireland’s problem is with Europe,” said Mr. Kenny.

Incoming ECB President Mario Draghi basically concurred with Mr. Kenny and noted that the European debt crisis has entered a “new phase” and that the EU’s leadership must come up with a “clear” plan to halt the spreading debt-implosion virus before it eats the flesh and bones of the common currency. Ironically, Mr. Draghi also still heads up…the Bank of Italy. That country’s bonds (and stock markets) took a drubbing in recent days as concerns have been mounting about its debt-reduction efforts. Many have come to see Italy as the next domino to teeter in the EU’s so-called “peripherals.”

Much of the above did not appear to undermine the euro this morning. The common currency gained some ground after the sell-off that impacted it earlier in the week. Thank you, Beijing. Speculators exhibited a rise in their appetite for risk following data that revealed stronger-than-expected growth in the Chinese economy. The gains noted in various commodity currencies this morning spilled over to the euro as well and there was a sense that investors were less worried about the potential for a global slowdown that might be sparked by the possibility of a deeper crisis in the eurozone.

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