Gold prices gained 0.2 % to reach $1,751.80 per ounce. The International Monetary Fund (IMF) and financial ministers from the fiscally disturbed Euro Zone have agreed over the Greek long-term debt reduction.
At the Comex division of the New York Mercantile Exchange, gold for December delivery fell $1.80 to end at $1,749.60 per ounce.
The European financial ministers and the IMF agreed to give Greece a longer term to pay back the bailout loans it borrowed from both groups. A reduction in the interest rates was also taken into account.
The situation in the Euro zone provokes a lot of unpleasant concerns, although many market analysts tend to consider Europe as not much significant to the global economy lately.
Investors are likely to restore their trust in Europe after the latest loan agreements. If this happen, it is very much likely their actions to be in support of the euro. It is possible, this week the market to test a price of $1,800. Gold prices may rise even more, if the world’s central banks move forward easing the monetary policy.
The big picture remains encouraging for investors to place their assets in gold. Most of them believe that the current issues are either not addressed, or won’t be realistically resolved in the near term. The current strategy of finance ministries and central banks working in a team to stimulate the startled economies, it may not be the solution, according to many traders.
Gold has always been considered a safe haven. That is because gold is a scarce commodity. The yellow metal carries a negative correlation with stocks, bonds and other commodities. Investors will use gold as a way to protect against inflation, devaluation of the U.S. dollar, and decline in stock prices.
A report which came out today shows that there is a certain improvement in the consumer confidence index. This fact may discourage gold prices temporarily. This improved consumers’ confidence along with good manufacturing index could back up the currently sluggish US economy. In respond, market participants would not have to turn to secure safe-haven investments.
In the near term, gold and silver prices may be looking for consolidation, as investors await further developments on the U.S. fiscal-cliff negotiations. The fiscal cliff refers to more than $600 billion of automatic U.S. tax hikes and spending cuts due to occur in January unless circumvented beforehand.
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