GOLD GAINS 10% IN 2011; IRAN FEAR SUPPORTS IN 2012
January 03, 2012
Gold ended 2011 with its 11th consecutive annual gain, up 10.2 percent for the year. The new year started with a promising start as gold moved up more than $35 on the New York Spot Market as of 9:00 a.m. PDT. Silver was also higher, up $1.80.
Investors acquired gold on safe haven buying following reports that Iran has produced its first nuclear fuel rod. Western nations are pressuring Iran to cease what is believed to be a nuclear weapons program. Iran denies any intent to develop atomic weapons.
The U.S. recently imposed sanctions against Iran and the EU is considering a ban on Iranian oil imports. Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. in Mumbai said "more sanctions are expected from the U.S. and other nations. This will have a positive impact on gold prices as ideally people would try to buy gold."
A number of central banks have increased their gold reserves including Turkey and Morocco, according to the International Monetary Fund.
The euro moved higher after better-than-expected manufacturing data from Chinese data, boosting investor appetite for risk. The euro may rebound in the near-term despite the problems affecting continental Europe, as investors are overly bearish on the currency, investor Jim Rogers said on Tuesday.
(Sources: "Gold Climbs to One-Week High as Iran Makes Nuclear Rod," Bloomberg, January 3, 2012; "PRECIOUS-Gold rises in line with euro recovery," Reuters, January 3, 2012)