Gold further hikes as safe-haven buying revives

14:14, May 10, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange staged a small comeback on Monday, topping 1,500 dollars per ounce again, on reviving concerns over the eurozone debt woes as well as the political unrest in Syria and Egypt.

The most active gold contract for June delivery climbed 11.6 dollars, or 0.8 percent, to 1,503.2 dollars per ounce.

Standard and Poor's lowered its credit rating on Greece, raising the probability of a debt restructuring, which may force EU to provide more help to the struggling eurozone member.

A trader mentioned that the rising debt trouble for Greece and the news that several protesters were reportedly killed in Syria, and 12 people died in Egypt following riots between Muslims and Christians, all contributed to lift up the bullion price, as investors usually purchase gold as a hedge to mitigate any probable economic and political turmoil.

Mike Daly, a gold specialist with PFGbest here in Chicago said that he expected the energy and precious metal markets to remain very volatile and susceptible to geo-political and economic data recently.

"These precious metals have been so technically overbought and that any bit of dollar friendly news could tank these markets, as these top heavy markets increase volatility tremendously often causing an avalanche sell-off scenario," Daly said.

Meanwhile, some analysts said the recent major correction in gold price also offered bargain hunters a good reason to purchase, restricting the losses, as the fundamentals of the precious metal market didn't quite change.

But some analyst said investors should remain extremely cautious, as the metals are still very vulnerable to downside pressures in short-term.

Silver for July delivery surged 1.829 dollars, or 5.2 percent, to 37.116 dollars per ounce.

Source: Xinhua
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