The Euro shares gained strength as the growth outlook became more stable. The possibility of more European monetary stimulus now seems less likely. In addition the euro reached an 11-month high versus its greenback rival. All of this together gave to back to gold price which rose to $1,670 per ounce this Monday.
Gold for February delivery advanced $8.80, or 0.5%, to settle at $1,669.40 an ounce on the Comex division of the New York Mercantile Exchange.
Gold traded in a short range during the past 2 weeks. Though, in the fourth quarter of 2012 the yellow metal made its largest quarterly decline, unseen during the past four years. This made investor very cautious considering the current situation.
Analysts comment that new buyers have to enter the market to stimulate a sustained rally. The jump in inflation levels is a good example for such concern. If there is no further development, it won’t be easy to keep a sustained rally. For now, gold traders have to stick to the current price range.
In addition, the 11-month high of the euro against the dollar gave back to the yellow metal price. Last week, the single currency posted its biggest rise in a week for this year.
According to analysts the strengthening of the euro was supported on the positive outlook for the Euro Zone. The quantitative easing there is likely to cease in contrast to the active monetary stimulus expected from Japan.
In the longer term the yellow metal prices are expected to fall further as US economic data improves on the narrowing quantitative easing.
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