Although gold prices fell below the $1,600 mark this week as elections in France and Greece were signaling a rejection of austerity hurt the pricing of the euro and at the same time helped the gold bullion market. All of which were benefiting the U.S. dollar.
At the same time, there are 17- euro nations of which over 50% of the investors are predicting they will exit while Greece is threatening to push their debt crisis even higher. This according to the latest Bloomberg Global poll.
The European financial turmoil over the euro is in response to the second anniversary of policy makers attempts to prevent Greece fiscal problems from turning into a serious epidemic.
“Certainly from a financial perspective the crisis can only intensify,” said Michael Derks, a poll respondent and chief strategist at FXPro Financial Services Ltd in London. “We’re likely to get more debt restructurings and it would be remarkable if Greece didn’t leave the euro within a year.”
“Another flare-up of the crisis is likely,” said Alessandro Mercuri, an interest-rate strategist at Lloyds Banking Group Plc in London who responded to the poll. “The key variable for Europe is domestic politics.”
As a result, Greece, Ireland and Portugal having received 386 euros ($501 billion) in aid and commitments, along with 214 billion euros in bond purchases , and 1 trillion euros from cheap bank loans from Central Banks have failed to succumb hostile investors.
“If Greece decides not to stay in the euro zone, we cannot force Greece,” German Finance Minister Wolfgang Schaeuble said yesterday. “They will decide whether to stay in the euro zone or not.”
There is some comforting news on the euro situation. Eighty-three percent have mentioned that this year the euro zone won’t collapse and 66 percent are hedging the region’s banking sector will not experience a meltdown. Eighty percent said Europe’s financial difficulties will not result in an immediate global economic slump in 2012.