Gold moves off four-month low as investors eye low prices
GOLD rose slightly yesterday, as buyers were enticed to the market because of its relatively low price.
However, the 2.51 per cent rise to $1575.20 still leaves gold well below its recent $1795 peak in March as investors steer clear of the traditional safe haven despite renewed Eurozone worries hitting other assets like stocks and bonds.
Analysts believe the unusual falls in gold prices have been caused by central banks ending quantitative easing, thus reducing inflationary pressures which eat away at the value of assets like bonds.
“Gold is losing out to other potential safe havens – for example the dollar is quite high and the US is relatively resilient to the crisis in Europe, making their bonds more appealing,” said Capital Economics’ Julian Jessop.
“Even German bonds are popular, squeezing out gold.”
“Whether this will last remains to be seen – in a Eurozone breakup even the dollar will suffer from the impact on the global economy, and we could see more quantitative easing. Assets like bunds could lose their safe haven status, and investors would move back to gold.”