Gold began to rise today since the start of the European session, rebounding from the Asian low of $1,586.84 to rise to $1,607.07 halfway through the U.S. session.
As the Euro has been falling since mid-way through the European trading session, this prompted investors to seek safety in the safe haven investment. Some have reservations about the bailout plan for Greece and see it as just “kicking the can down the road”.
Meanwhile, ratings agencies like Fitch Ratings said it will consider Greece to be in a “restricted default” after the 159 billion-euro EU bailout plan drafted at the EU summit on Thursday includes getting bondholders to assume part of the cost.
“The proposed debt exchange implies a 20 percent net present value loss for banks and other holders of Greek government debt,” Fitch said today in an e-mailed statement. “An exchange that offers new securities with terms that are worse than the original contractual terms of the existing debt and where the sovereign is subject to financial distress constitutes a default event.”
The Euro dipped to a U.S. session low of 1.4323 from the 1.4436 high in the European session.
“We are in a general risk-off environment right now and that is diving the euro lower,” said Greg Anderson, G10 strategist at CitiFX, a division of Citigroup, in New York.