Gold Starts Week Strongly, Eurozone Bank Plan “Positive but Ambitious”, China’s Gold Sales Jump 50% but Home Sales Plunge

WHOLESALE MARKET gold bullion prices climbed to $1670 an ounce Monday lunchtime in London – 2% up on last week’s close – while stocks and commodities also rose and government bonds fell following a pledge by France and Germany to recapitalize Europe’s banks.

Silver bullion rose to $32.37 – 3.8% up on where it ended last week.

“Physical demand for gold is very strong, with gold below $1,650”, says Marc Ground, commodities strategist at Standard Bank.

“[This means] the potential for future short covering exists, which could see prices push higher.”

“The physical premium [on the Shanghai Gold Exchange] has been very strong,” adds one gold bullion dealer in Hong Kong.

China meantime saw strong gold sales during last week’s holiday period – in sharp contrast to disappointing real estate figures.

The leaders of France and Germany announced Sunday that they will have a new plan to deal with the ongoing Eurozone crisis within the next three weeks.

“We will recapitalize the banks,” said French president Nicolas Sarkozy, as part of a joint briefing held with German chancellor Angela Merkel in Berlin.

“By the end of the month, we will have responded to the crisis.”

“The Merkel-Sarkozy announcement is positive as it focuses on banks,” says Alberto Gallo, London-based strategist at Royal Bank of Scotland.

“The timing appears ambitious, however. Having a full response to the crisis by month-end sets a high bar.”

“Typically liquidity concerns and funding issues are not gold’s friends,” says a note from UBS this morning.

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via Gold Starts Week Strongly, Eurozone Bank Plan “Positive but Ambitious”, China’s Gold Sales Jump 50% but Home Sales Plunge – Buy Gold Online with the Bullion Vault – GoldSeek.com.

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