Gold prices rallied in U.S. dollars and hit an all-time high in Euros -- a response to Moody’s downgrade of Portuguese government debt to junk last week -- amid concern that troubles in Italy and Greece will drive Euro down. Although gold prices have been high, the gold futures contracts have remained low, indicating that there is not yet a “gold rush."

“It would seem there is scope for futures investors to become more active in the market,” says Daniel Wills, senior analyst, and Nicholas Brooks, Head of Research and Investment Strategy, at ETF Securities, in Monday's issue of Precious Metals Weekly.

Supply from mines in South Africa look endangered: The National Union of Mineworkers announced last week that it had broken off negotiations with Anglo Platinum, the world’s No.1 global producer of platinum. The union has also discussed strikes against South Africa’s largest goldmine as negotiations reach possible impasses. The next round of talks will take place July 13.

Gold spiked above $1,1540/oz and EUR1094/oz. Italian 10-year government bond spreads over German bunds hit a 9 year high as Moody’s downgraded Portuguese debt to junk last week. Investors fear that Italian debt will be downgraded and that Greece may be allowed some kind of default. At the same time, growth in U.S. payrolls helped anchor expectations of low US interest rates, another boost for the gold price.

The rise in the European central bank rate failed to shore up the Euro. Although the ECB hiked rates 25bps last week, less hawkish commentary from ECB president Trichet and continued market focus on Europe’s inability to contain Greece’s sovereign debt problems keep Euro prices down.

Gold futures are back at February 2011 levels.