Gold Up as Berlusconi Talks of Return & Monti Goes

Spot market gold bullion prices rose to one-week highs above $1,710 an ounce Monday morning, while European stock markets fell following news that Italy's prime minister plans to resign. 

"Gold continues to consolidate its gains from August-September, and is still respecting its long term uptrend," says the latest technical analysis from bullion dealing Scotiabank. 

Italy's FTSE MIB index was down more than 3% on the day by Monday lunchtime, after technocrat Italian prime minister Mario Monti announced over the weekend his intention to resign once Italy's next budget is passed by parliament. 

Monti's announcement comes after members of former prime minister Silvio Berlusconi's People of Liberty party last Thursday declined to support a package of economic measures proposed by Monti's government. 

Berlusconi wrote on his Facebook page Saturday that he intends to contest next year's elections.

"Everybody agrees that we need an acknowledged leader to win," he said. 

"Such leader, a replica of what Berlusconi was in '94, has not been found. It is not a matter of not having searched: we have indeed searched for one, but he does not exist...it is with desperation that I am returning to take interest in public affairs, and once again I am doing so out of a sense of responsibility." 

Over in Athens meantime, the Greek government has extended until noon tomorrow London time the deadline for bondholders to participate in its bond buyback, through which Greece hopes to buy back debt with a face value of around €30 billion, spending €10 billion since the bonds are trading below par. 

"Investors should bear in mind that even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path," says a statement from the Greek finance ministry. 

"Future measures may not involve an opportunity to exit investments in Designated Securities at the levels offered for this buy back." 

Greece was close to reaching its target for the buyback by Sunday, according to an unnamed finance ministry official quoted by news agency Bloomberg. 

"They call this debt sustainability, but it's only [sustainable] on paper," says Commerzbank chief economist Joerg Kraemer. 

"The buyback was a success because investors do not believe in the debt sustainability." 

Silver meantime hovered above $33.30 an ounce for most of Tuesday morning, up slightly on last week's close, while other industrial commodities ticked higher and US Treasury bonds also gained. 

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