Gold set for weekly gains amid geopolitical uncertainty
Gold has gained 27 per cent so far this year.
Gold futures were approaching the $1,600 an ounce level during lunchtime trade in New York on Friday, extending a rally that kicked off in the early morning hours in Europe.
Gold traders were reacting to news that the EU will create the Troubled Country Relief Program, a fund similar to the one set up in the aftermath of the US sub-prime crisis, “to break the vicious circle between banks and sovereigns”.
Commodity Online quotes research from Commerzbank following the news that forecast a sharp rise in the price of bullion in the second half, despite gold’s recent trading behaviour that suggest investors do not regard it as less risky an asset than stocks:
“Gold is thus behaving less like a safe haven at present and more like a risky asset class,” the bank continued.
“In any case, we are confident that bargain-hunters will support gold at the current prices, and expect to see a sharp rise in price in the second half of the year. Fundamentals also strongly suggest increased platinum and palladium prices.” Commerzbank concluded.
Gold has retraced more than 10% from its 2012 peak of just under $1,800 hit in February. Gold closed at $1,564 on 30 December 2011 – should it hold current levels it would constitute the 12th annual increase in the price of the yellow metal.
Gold hit an all-time intra-day high $1,920 at the start of September last year, but then quickly fell back over the ensuing days, losing $105 or 5.6% in value in a single session.
