One of the causes has been the downgrading of the US sovereign debt to AA+ from AAA, a rating it had held for the past 70 years....the efforts by the US government to support the faltering economy is another reason. rising interest rates usually lead investors away from gold. However, the decision by the US Federal Reserve to leave interest rates close to zero for two more years will boost the gold market.
Several European countries, such as Portugal, Ireland, Greece, Spain and Italy, may be forced to default in the short to medium term. Their efforts to reduce spending and increase taxes are being hampered by a faltering Eurozone economy, which grew by just 0.2% in the second quarter, its worst performance after emerging from the recession in 2009. There are also concerns about the ability and willingness of relatively stronger countries, such as Germany and France, to support the troubled ones.