The price of gold looks set to trade higher and is holding steady near $1800 an ounce on Wednesday as turmoil in Europe sees investors and traders piling back into the king of safe haven assets.
Latest Price of Gold
Gold futures for December delivery rose 0.5 percent to close yesterday’s trading session at $1,799.20 an ounce, after touching $1,804.40, the highest since 21st September 2011.
Turmoil in Europe
“The turmoil in Europe has brought the fear trade back to gold. Also, a renewed wave of policy easing by central banks is helping gold.” according to Lance Roberts, the chief executive officer of Houston based Streettalk Advisors.
Analysts are questioning whether the political developments surrounding Italy were indeed positive for Europe on Wednesday morning, amid a lack of clarity over who might succeed Italian PM Berlusconi.
“We see little indication that a new government will assuage investor concerns about the feasibility of the recently proposed deficit and debt reduction plan.” said Andrew Cox at Citigroup.
Italian Cost of Borrowing at Record
Meanwhile, Italy’s cost of borrowing has touched a new record, a day after Prime Minister Silvio Berlusconi said he would resign once budget reforms are passed. The yield on Italian 10 year government bonds reached more than 7 percent, the highest since the euro was founded in 1999.
The latest round of gloom in Europe is once again weighing on stock markets and it seems gold prices may well rally again after holding out around the $1800 mark.
Gold bullion is in the 11th year of a bull market, and gold futures reached a record $1,923.70 in New York on 6th September as investors sought to diversify away from stock markets and some currencies.
Gold prices have so far gained 27 percent this year.