Investing.com – Gold prices climbed on Tuesday morning in Asia, driven in part by an escalating currency crisis in Argentina. The peso hit a record low on Monday and President Mauricio Macri vowed to employ “emergency” measures to resolve the crisis.
for December delivery edged up 0.02% to $1,207 at 11:51PM ET (03:51 GMT) on the Comex division of the New York Mercantile Exchange.
Argentina announced on Monday new austerity measures with the ultimate goal of eventually balancing the budget by next year. These measures include new taxes on exports and further cuts to government spending. The Macri government wants to speed up the release of a $50 billion loan from the International Monetary Fund (IMF).
Macri said poverty levels would rise as inflation rises to over 30%. The country raised interest rates to 60% in late August.
Macri said on a televised public address on Monday: “This is not just another crisis. It has to be the last.”
Markets have remained on edge about the currency crisis in Turkey, where the central bank pledged to review monetary policy later in September and consumer-price inflation rose in August to 17.9%, up from 15.9% in July. The Turkish lira has lost about 40% value against the U.S. dollar this year, rattling markets.
Turkey’s central bank said in a statement on Monday that “(r)ecent developments regarding the inflation outlook indicate significant risks to price stability… [The] monetary stance will be adjusted at the September monetary policy committee meeting in view of the latest developments.”
The , which tracks the greenback against a basket of currencies, went up 0.13% to 95.18 on Tuesday morning.
Also supporting gold prices was the disclosure by Reserve Bank of India in its annual report on Monday that it bought 8.5 tons of gold through the 2017-18 financial year, the first gold purchase in nine years.
Saugata Bhattacharya, chief India economist at Axis Bank, said, the “addition of gold to RBI’s forex reserves is probably a diversification of assets for their deployment, keeping in mind both the build-up of reserves in 2017 as well as the evolving global risks, including market volatility and rising policy rates in the U.S.”
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Source: Investing.com
