Gold rallied to a new all-time nominal high of $1923.70 overnight prior to selling off sharply with the announcement that the Swiss Central Bank has placed a ceiling on the CHF/euro of 1.20.
It's easy to see why gold and silver immediately sold off as the last remaining safe haven currency, the CHF, pegged itself to the debasement and destruction of the Euro.
And by it's easy to see, we mean WTF are people thinking?
Oh wait, it wasn't people, it was a cartel raid to prevent INSTANT G2K!
Gold fell from a record in London on speculation a move by the Swiss central bank to impose a ceiling to the franc’s exchange rate will cut demand for the metal as an alternative to assets including equities. (Sorry, come again? Debasement of the swissie will cut demand for gold and silver?)
The Swiss franc tumbled after the nation’s central bank set a minimum exchange rate of 1.20 per euro and said it will defend the target with the “utmost determination” if needed.
European equities gained after a two-day slump. Ministers from Germany, Finland and the Netherlands will meet today to discuss a Finnish demand for collateral in a bailout for Greece, while the Italian Senate will debate an austerity plan amid a strike.
“The cry of ‘risk on’ rippled through a host of markets” after the Swiss announcement, Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., wrote today in a report. Still, “in theory a capped Swissie further restricts options for safe havens, which one could argue would be a positive for gold” and any drop in bullion “should be viewed as an opportunity to add to positions, with the factors that supported gold through August still present.”
Immediate-delivery gold gained as much as $20.92, or 1.1 percent, to $1,921.15 an ounce and traded down 0.7 percent at $1,887.55 by 10:10 a.m. in London. It fell as much as 2 percent after the Swiss announcement. Gold for December delivery was up 0.8 percent at $1,891.30 on the Comex in New York after touching $1,923.70.Read more from Bloomberg: