The euro currency rebounded and gold futures headed lower after Italian
President Giorgio Napolitano announced that Prime Minister Silvio Berlusconi
will step down after the nations Parliament approves a new austerity bill.
Berlusconi's resignation followed Parliament after he was unable to shore up
an essential majority in Parliament, leading to calls for his removal from
office. The euro spiked from near 1.378 toward 1.385 against the U.S. dollar
following the news, while COMEX gold futures slid from an intra-day high of
$1,804.40 to near $1,790 per ounce. U.S. equity markets rebounded as well, with
the S&P 500 Index higher by 0.5% at 1,267.95 in afternoon trading. While
financial markets showed a positive initial reaction to the news, Fil Zucchi of
Minyanville.com warned that investors should be careful what they wish for. If
Berlusconi resigns, the consensus seems to be that a technical government can
step in, implement the reforms required by the European Union, and reverse the
growing credit crunch affecting Italian bonds, Zucchi noted .
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