Sunday, December 5, 2010

Gold set to soar above $1,425 next week

LONDON (Commodity Online): America’s weak job report has helped gold prices gain this week with further rise predicted for next week also.

Gold for February delivery rose $16.90 to $1,406.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,409.90 and as low as $1,385.30 during Friday’s session.

Gold prices reached for new highs this week on the back of a really disappointing November US unemployment report.

Mostly the job report helped gold in safe haven buying. The moment the employment data was out about the nonfarm jobs increased 39,000 while the private sector added 50,000 jobs, gold prices shot up.

Analysts expect the gold prices to shoot up to $1,425 next week. Gold’s record close was back on November 9 when the prices settled at $1,410.10 an ounce. 

Gold prices are also finding support as the euro gained on better-than-expected October retail sales from the 16 eurozone nations as well as speculation that the European Central Bank was buying Portuguese and Irish bonds.

However, some analysts have said that unbalances in the global financial system and irrational behaviour on the part of investors are some of the reasons why gold prices are so high and.

They said the gold market currently displays signs of an asset bubble. This is the view put forward by French bank Natixis.

Natixis says the tough fiscal packages agreed with both Greece and Ireland as well as the hard fiscal line being taken by other European countries means that the region is slowly moving from a positive to a negative influence on the gold market.

In the US, the bank says, gold prices are currently being supported by ultra-low short-term and long-term interest rates as investors are concerned about the longer term inflation impacts of such loose monetary policy.

Source: Commodity Online Dot Com
Published on: December 04, 2010 at 16:05