debt crisis

Moody’s has trimmed the rating for Greece by 2 notches to Ca Monday which is just one notch before the default status. The ratings agency warned that chance of a default is now “virtually 100 percent.”

Moody’s noted that while the bailout agreed last week by euro zone leaders will help Greece to reduce its debt, the country still faces medium-term solvency challenges and significant implementation risks.

German and French leaders have come to a consensus over the second bailout for Greece in a move to avert crisis for the whole Europe and the world.

After 7 hours of talks between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Berlin. European Central Bank President Jean-Claude Trichet was present for part of their talks.

Now their decision will be presented to crisis summit in Brussels on Thursday starting at 1100 GMT of all 17 leaders of the bloc.

After 11 days of consecutive gains gold remained steady below its record high on Tuesday.

Experts believe gold appeal as a safe haven will remain as there is no short-term prospects for euro zone crisis solution while the White House was pursuing a fallback plan with Congress to raise the U.S. debt ceiling and avert a default that could plunge global financial markets into chaos.

Spot gold was little changed at $1,602.41 an ounce by 0325 GMT, off the record high of $1,607.01 reached on Monday.

U.S. gold GCcv1 was almost steady at $1,603.20.

China believes the United States will be able to come out of its debt crisis and resolve an impasse related to raising debt ceiling with no need to be declared a default. China is interested in having US on a high level as it is the biggest foreign creditor and the dollar decline would have a negative impact on its economy.

Chinese advisers think that the deadlock in budget negotiations would not prevent the US authorities to come to a decision to raise the debt ceiling.

The head of the OECD warned Monday that Europe needs to present a plan to involve private investors into the global effort to help Greece and give Athens time to deal with its problems.

"Time is critical, time is important to avoid a liquidity problem becoming a solvency problem. Time is of the essence also in order to allow for a recovery of everyone," Angel Gurria, head of the Organization for Economic Cooperation and Development, told reporters.

Moody’s downgraded Portugal’s credit standing to junk, the first ratings agency that made the move which mean the country may need a second round of rescue funds before it can return to capital markets.

The rating cut was not absolutely unexpected and reminded that troubles in Europe are not ending with Greece’s bailout.

Some economists think Ireland may also need additional support, and investors worry Spain and Italy could be next in line for aid.

On Monday gold increased by 0.5% as investors decided to benefit from the lowered prices while expecting the euro to further advance against the US dollar.

Spot gold was quoted at $1,494.59 an ounce at 1138 GMT compared to $1,485.80 late in New York on Friday. U.S. gold futures for August delivery rose $12.60 an ounce to $1,495.20.

Greece last week approved austerity measures needed for it to access another tranche of funding from the European Union and IMF, sparking a relief rally in some assets seen as higher risk, and weighing on gold.

Jean-Claude Trichet, the President of European Central Bank, said Friday that those nations who had not yet adopted far-reaching structural reforms faced weak growth after the financial crisis.

Addressing the audience at an annual ECB watchers conference, Trichet noted that the diversity featuring the euro zone reflects that of the United States and reiterated that new EU debt rules did not go far enough.

"Those countries that have yet to implement more far reaching structural reforms also have relatively low growth prospects after the crisis."

Mexican central bank chief Agustin Carstens , the only declared rival to French Finance Minister Christine Lagarde in her bid for candidacy to lead the International Monetary Fund, said a non-European head of the Fund would mean tougher measures against euro zone crisis. Meantime, all we know that it won’t ever happen.

"It would be appropriate to have a non-European because a pair of fresh eyes could see European problems with greater objectivity," Carstens told El Pais in a visit to Spain as part of a tour to campaign for the job.

In early European session on Friday, the common European unit revealed mixed presence across the board. Although the euro-zone debt worries temporarily eased after efforts made by Spain to raise funds, traders are cautious and looking for fresh directions in the upcoming trading sessions.

Wednesday in Singapore, bullion strengthened on bargain hunting driven by persistent worries that debt problems in Europe were worsening, but rising stock markets could still spur a shift to riskier assets.

Tuesday in Singapore, bullion flat on safe haven buying as a downgrade of Greece's debt to junk reminded investors the debt crisis in Europe was far from over.

Spot gold was trading at $1,220.20 an ounce by 12:08 a.m. ET, changed slightly from New York's notional close on Monday, when it lost around $3. Trading was thin with Chinese speculators away for the Dragon Boat Festival holiday.

As Gary Locke, the US Commerce Secretary announced Monday, he has a firm belief the long-term health of the US economy would be positive despite concerns raised by the sovereign debt crisis in Europe.

Monday, in early European trading the alpine currency revealed mixed presence amid its rivals. The franc thus eased from a new record high against the euro, but it recovered from a 6-day low against the yen and the dollar. Against the pound, the franc pared its recent gains.

Monday in Singapore, bullion recouped from previous lows. At the same time, bullion priced in euro striking a record after the single currency slumped, but trade was likely to remain erratic as investors  watch currencies gyrate.