In volatile trade in New York yesterday, gold rose sharply prior to falling and ended $4.40 lower or 0.27% and closed at $1,651.70/oz. Gold initially took a dip in Asia and then recovered losses by the time European trading opened and has ticked higher.
Gold’s safe haven appeal is gradually rekindling as concerns deepen about Spain and the other periphery eurozone economies and a realisation that the eurozone debt crisis is far from over.
With the situation in Europe and globally set to deteriorate, the lacklustre demand of recent weeks, particularly in western markets may change to renewed robust physical demand.
There are signs of this already with inflows into gold-backed exchange traded products the most in five weeks last week, and silver holdings in the iShares Silver Trust, the biggest ETF backed by silver, rose 45.3 metric tons yesterday alone to 9,636.69 tons.
Gold 1 Year Chart – (Bloomberg)
This demand should support bullion prices at these levels and there is support at $1,600/oz. There is extremely strong support above the $1,500/oz level after prices consolidated between $1,500/oz and $1,800/oz since last September. (more)
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