, where pessimism dominated markets once again and the outlook for the euro area remains the weakest among its major rivals. There were no breakthroughs on Wednesday to alter the sentiment and investors were spooked after an Italian auction again ended with a new historic borrowing record as the debt crisis inflates.
Italy sold 3.0 billion euros of five-year bonds at an average new record yield of 6.47% rising from the previous auction at 6.29%. The pressure of rising yields keeps the alarm ticking on the debt crisis and the materialization of the agony in Italy that investors are just betting it’s a matter of time that it will fall as well.
Merkel urged patience and believed that Europe will emerge stronger than it is after the crisis that takes hard work yet that did not unwind the pessimism in the market especially following a report about the German Chancellor Angela Merkel expressed her rejection for boosting the European Stability mechanism, according to a report out from Reuters yesterday.
Traders will continue to monitor the developments from the 17-bloc euro nation and the European leader’ latest moves to contain the debt crisis, where we expect volatility to persist this week.
Accordingly, we should expect more fluctuations for gold, but should the current pessimism persist, we should expect gold prices to extend the rallies, however, the level of uncertainty is very high, and investors are ought to remain cautious.