Monday, December 19, 2011

The Future of Gold is still Promising


Gold futures began to recover in the trading session on Friday (16/12). Some reasons underlying the weakening gold on last few hours. Throughout this week, gold has been dragged down by worries of investors against the European crisis. If the first precious metal is seen as a safe haven ideal, its charm has faded along with the appreciation of the dollar. Gold for February delivery rose $ 10.90 (0.7%) to as low as $ 1,588.00 per ounce. Gold managed to scrape a weekly loss to about 7.5% (data FactSet).

In addition triggered by global worries, the weakening of gold carried on investment trend at the end of the year. Many investment institutions began to cut positions and liquidate holdings to seek a balance sheet. The higher level of losses on other risky investments assets, means greater of volume of the removed position.

Dollar tumbled since yesterday despite some positive data was released. The results of a good Spanish bond auction supporting the euro exchange rate so that the USD began to fall. Deutshe Bank and Credit Agricole seen that the gold correction so far do not reflect the real prospect in the future. Negative real interest rates, fundamental risk and volatility in the stock market strongly support the increase. Agricole even mention there are 3 important factors to shore up prices, namely: still high interest in the physical as well as the entire stock action of central banks and the capital owner. It's still coupled with the possibility of quantitative easing and asset diversification requirements of investment managers.

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