Gold Prices Surge, Euro Falls Against Dollar Despite US Downgrade

Chris Mullen at GoldSeek wraps up Monday's action...

Gold Prices rose to a new all-time high of $1714.88 in Monday's Asian trade before retracing back to $1691.15 at about 10am EST, but they then rose to a new record high of $1718.79 by early afternoon in New York and ended with a gain of 3.24%.  

Silver Prices climbed to as high as $40.32 in Asia before dropping back to $38.42 by late morning in New York, but it then rallied back higher in the last couple of hours of trade and ended with a gain of 2.53%.

Euro Gold Prices climbed to a new record high at about €1205.

Silver and Gold Mining stocks rose roughly 3% by midday, but they were then dragged lower by general market weakness in afternoon trade and the HUI and GDM closed near unchanged while the XAU ended with a modest loss.

Platinum gained $4.75 to $1716.75, and copper fell over 15 cents to about $3.96.

The ECB announced plans to intervene in the bond markets and buy Spanish and Italian debt, but doubts remain about whether or not that is the appropriate step to take.

The European Central Bank's move to buy Italian and Spanish bonds to tame the region's debt crisis marks a step toward the kind of fiscal union that Germany has opposed since the founding of the single currency. 

While investors and economists say tighter fiscal ties and increased transfers to the financially weak Euro states will be needed to end the financial contagion, purchases of Italian and Spanish debt that Royal Bank of Scotland Group Plc estimates may eventually reach €850 billion ($1.2 trillion) threaten fresh political fault lines.

Oil fell over 6% on S&P's credit rating downgrade.

The US Dollar rose as the Euro fell on Europe's debt problems.

US Treasuries rose markedly as the Dow, Nasdaq, and S&P dropped over 5% more on worries about S&P's downgrade and Europe’s debt problems.

Among the big names making news in the market Monday were Fannie Mae, Freddie Mac, Bank of America, Tyson, Verizon, and AIG.

Tuesday at 8:30am EST brings second quarter Productivity expected at -0.6% and Unit Labor Costs expected at 2.2%.  At 2:15pm is a FOMC Rate Decision.

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