Last week, gold provided additional profit taking opportunities as it reached a seven week high.
A weakening US dollar encouraged investors to renew their safe haven interest in the yellow metal, but temporary lack of Chinese demand due to public holidays kept the gains moderate. The decision by the U.S. Federal Reserve to push back the date for any increases in its benchmark interest rate only fuelled investor appetite, pushing the gold prices above $1700 for the first time in more than five weeks.
With gold prices continuing to beat various moving averages, a signal some analysts perceive as being bullish, the demand for the yellow metal lifted spot prices more than 4.5% for the week. Investors who bought gold to hedge against inflation also buoyed demand. The precious metal regained the lost safe haven appeal after prices soared higher following the weak U.S. GDP report.
Additional support was provided by the world’s biggest hedge fund, Bridgewater Associates maintaining a bullish sentiment on gold as a hedge against inflation.
The gold rally is on track to see prices rise more than 10.0% for the first month of 2012. This is also the biggest advance since August and the best start to a year since 1980.
