Caution has marked trading in most markets today at the start of the G20 summit in Seoul. Gold is marginally lower in dollar terms but is higher in euro terms due to sovereign debt issues in Ireland and other periphery eurozone states. Gold is also higher in yen which was have fallen sharply today prior to the G20 summit.

Gold is currently trading at $1,397.05/oz, €1,017.66/oz, £869.14/oz.

At the start of the G20 summit meeting, President Obama tried to calm fears of a currency war and other tensions. World Bank President, Robert Zoellick qualified his recent comments regarding a modified gold standard saying that gold's role in the international monetary system needs to be discussed as it is the "yellow elephant in the room" which is being used as an alternative monetary asset because of unease and a lack of confidence in western economic and monetary policies.

Peripheral sovereign risk and the possibility that some eurozone members will need to access the European bailout fund is supporting gold and may have contributed to slight falls in equity markets. The ECB has already resorted to printing euros to buy government bonds of countries such as Ireland. This is debt monetisation which is a form  of quantitative easing which is leading to concerns about the euro along with the dollar.

India owns more than 18,000 metric tons of gold worth some $800 billion, the World Gold Council said today. That is equivalent to about half of ounce of gold owned per capita, "significantly below consumption in western markets" . India's gold holdings are at least 11 percent of the global above-ground gold stocks, it said. The savings rate in India is about 30 percent of total income, with 10 percent invested in gold, the council said. As India's economy grows and wealth increases their huge propensity to own gold could lead to even greater demand.

Silver surged yesterday and shorts panicked to close positions. Subsequently silver fell from the highest price in 30 years after CME Group Inc.'s Comex unit raised the margin requirements. This has given the shorts some breathing space but the possibility of a short squeeze leading to much higher prices remains.