Gold passes $1200/ounce as global equities take a dive

Gold spiked to $1200/oz last night, hitting a new 2010 and all time high. Demand for the yellow metal defied a rout in US equities, and a rising US dollar, which if often applies downward pressure on gold.  However, yesterday's spike in gold was due to its appeal as a safe-haven asset by investors amid rising volatility in currency and stock markets, which are heavily impacted by the ongoing European debt crisis.
In the latest development, Greece agreed to massive budget cuts that will amount to €30 billion over the next three years on top of the economic austerity measures already implemented in order to secure a €110 billion bailout from the European Union and International Monetary Fund (IMF).
Germany, which will account for the bulk of the financial aid package, said it would not provide any funds for Greece unless it passes economic reforms to keep its soaring budget deficit under control, forcing the country to radically cut spending.

The EU’s stats agency Eurostat has recently revised Greece’s 2009 deficit to 13.6% of the GDP from the previous estimate of 12.9%. The county is aiming to bring the deficit within the EU’s cap of 3% by 2014.

Greece’s fiscal crisis has been weighing on the euro for months to weaken it against the US dollar and limit gains in gold, which is seen as an alternative investment to the greenback and usually moves inversely to the American currency. However, gold has lately defied this trend, coming close to topping all time highs on safe-haven buying.

http://www.proactiveinvestors.co.uk/companies/news/16338/gold-passes-1200ounce-as-global-equities-take-a-dive-16338.html