In the Lead with Jon Nadler:Aux Armes, Citoyens!
The electoral ouster of French President Sarkozy sent the euro into quite a tailspin on Sunday evening and that development helped the US dollar push aggressively towards the 80.00 mark on the trade-weighted index. The breach of the $1.30 level against the greenback by the sliding (to a three-month low) euro made the opening quotes in precious metals fall into the red column fairly swiftly. Declining metals prices were accompanied by a near 3% fall in the Nikkei Average, a slide in crude oil to four-month lows, and by a generalized retreat in risk-taking sentiment.
Spot gold bullion traded at lows near the $1,635 level in Sunday night trading, while the news from Paris also engendered bid-side quotes at near $29.90 for silver. Considering the fact that the second largest economy in the EU has just been handed over to Socialist control (for the first time in 17 years), and that the advent of Mr. Hollande’s tenure is likely to give rise to deeper rifts with previously stated German economic and budget deficit policies, the damage to the euro was relatively contained.
Albeit somewhat more stable, the metals markets opened to the downside in gold and in silver and with modest advances in platinum and palladium on Monday morning in New York. The action reflected a decline in the US dollar after last night’s surge to the round resistance level and the return by the euro to a level just above the $1.30 pivot point.
