On Thursday gold stands firm above $1,600 per ounce. The steady price is supported by worries that Cyprus bailout deal could turn into a blueprint for solving banking crises in Europe. Such possibility triggered the revival of gold’s safe-haven appeal.
By 7:22 am GMT the precious metal was steady flat at $1,604.20 per ounce. Yet, the price was still below the last week’s one-month high of nearly $1,616 per ounce. Back in September 2011, gold prices rallied to a record high of almost $1,920 per ounce. That was a time when the rising debt crisis in Europe incited a buying frenzy.
Meanwhile, the US gold lost $2.30 to trade at $1,603.90 per ounce.
In March, gold is on the move for a 1.6% gain. This would be the rise in six months. The gain comes in time of Euro Zone financial stability concerns triggered by the crisis in Cyprus. Later in the day banks on the island will open once again. Many excited depositors are expected to charge the banks as the reopen.
Futures metals analysts think that the short-term projection still weigh on European developments. There will be enough uncertainty to give the gold market some support for the upcoming week.
The speculations over Cyprus debt crisis is likely to fade away in the near future. Though, the unusual circumstances of the bailout are expected to stay a bit longer.
Ahead of the Easter holiday, the physical market is not very active, because jewelers and speculators stepped back before the celebrations. In Hong Kong and Singapore premiums stayed unchanged in range from $1.20 to $1.50 per ounce.
The rescue plan of Cyprus will impose losses on bank depositors. Also savers pulling money out of some other Euro countries is not very likely. These are additional concerns which push gold forward.
For the moment the yellow metal is still stuck in a range. The upside is seen between $1,610 and $1,615 per ounce. A scale-down purchase is very likely when the price falls below the $1,600 threshold.
Another supportive factor is the hope that the U.S. Federal Reserve will keep its loose monetary policy. Last October the Feds announced a third phase of aggressive monetary stimulus. That propelled gold prices to an 11-month high. Recently policymakers gave positive signs that the US central bank will sustain its bond purchasing program along this year.
