Is global demand for bullion growing?
*Reuters, by Frank Tang & Jan Harvey, March 3, 2010:
''Spot bullion has increased for a fifth consecutive session, as the
metal is benefiting not only from the dollar's weakness, but also from
fears over financial instability in general. Gold priced in euro and
sterling both hovered near record highs.
Uncertainty over plans to tackle Greece's fiscal crisis and over what
the next British election may mean for U.K. debt have heightened
volatility in the European currencies, lifting interest in gold as an
alternative asset, analysts said.
'The market is looking for some security with gold,' said Commerzbank
analyst Eugen Weinberg. 'The problems in the euro zone, and the
problems in Greece, may well pull people into the gold market as they
look for diversification and security.'
Gold has traditionally been used as a safe haven in times of economic
and political uncertainty, as the metal's intrinsic value is not
dependent on any paper currency.
Spot gold was at $1,139.65 an ounce at 2:46 p.m. EST (1946 GMT),
against $1,134.50 late in New York on Tuesday. It hit a high of
$1,144.60 earlier in the session, the loftiest since January 15.
U.S. gold futures for April delivery on the COMEX division of the New
York Mercantile Exchange settled up $5.90 at $1,143.30 an ounce.
The euro rose after Greece announced plans for a further $6.55 billion
in pay cuts and tax hikes to reduce its crippling deficit.
Concern over the fiscal health of peripheral euro zone economies such
as Greece, Italy and Spain have weighed heavily on the euro this year.
It is currently down nearly 5 percent versus the dollar in 2010.
The euro also benefited on Wednesday from data showing the U.S. Private
sector shed 20,000 jobs in February, in line with expectations. The
numbers are seen as an important precursor to key U.S. non-farm
payrolls data due on Friday.
Gold's inflation hedge appeal should increase after the Federal Reserve
Beige Book summary showed economic activity strengthened modestly
during February.
EURO, STERLING GOLD FIRM
Gold prices held near the record highs they hit on Tuesday in euros and
sterling terms, boosted by volatility in the foreign exchange markets.
'Gold is being used as a bit of an alternative to currencies,' said
Citigroup analyst David Thurtell. 'It takes you out of dollar or euro
exposure and puts you into a non-currency.'
Euro-priced gold hit a high of 835.97 euros an ounce, close to the
previous session's record 836.72 an ounce, while gold priced in
sterling rose as high as 758.99 pounds an ounce, just off its record
high of 759.86 an ounce.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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