In early Monday afternoon trade in East Asia today, benchmark Comex gold futures traded nearly 1% higher, as news reports say that Germany had rejected calls to use its gold reserves to help shore up the Euro-zone rescue fund. Over the weekend in Europe, German media reported that leaders at the Group of 20 summit in France, had floated the idea that the Bundesbank’s gold reserves could be used to underpin the European Financial Stability Facility, but the plan was a quickly rejected by senior German officials.
Gold for December delivery was up 0.9% at $1,771.50 per troy ounce, gaining from its Friday settlement of $1,755.70 in New York.
Gold prices closed at $1,765 per ounce Friday, up about 34% from the lowest level of $1,318 in January.
Gold peaked at $1,890 per ounce in mid-August.
Last trading session, gold and silver contracts closed out overall lower. Investors’ concerns relevant to the ongoing debt crisis in Greece pressured markets and lead to broad based sell-off. Precious metals trends suffered as a result.
The sell-offs resulted in December contract gold closing out the last session lower by 0.51 percent or negative 9.00 at 1756.10 per troy ounce.
Silver contract for December delivery finished the session red as well by 1.20 percent or negative 0.414 to close at 34.08 per troy ounce.
These trends for gold and silver are positive during the last several weeks. The troubles stemming from the Eurozone ultimately set the stage for investor uncertainty. The fear of a potential debt default and European recession reverts on a global scale. The Euro has been volatile during the turmoil and market players are rethinking positions. The instability in the European currency is likely to motivate them to reposition with gold. The safe haven appeal of precious metals have helped trends stay positive over the course of the past several weeks. As Greece continues to work out its problems, investors will continue to seek out safe havens. Precious metals are expected to continue attracting market players in the current market environment.
However, it is not yet clear how long this will continue.
In China, Lan Fusheng, vice chairman of Zijin Mining, said in an interview with Dow Jones Newswires that current gold prices are too high to sustain, and high prices will also hamper investment abroad.
“Prices have been boosted not only by people’s needs to hedge risks, but also by speculations,” he said, adding that in his opinion gold prices should stay at $1,200-$1,300 per ounce in the next few years.
