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Analysts Note Sources of Optimism for Gold Prices

Release Date: 
Thursday, March 10, 2011

Analysts from MKS Finance and Phillip Futures expressed optimism for gold prices today as Middle East unrest continued and the long term prospects for ailing Eurozone economies came under question. Prices were $1420.80 an ounce at 6:15 AM Pacific Time on the New York Spot Market. Silver prices were steady, near 31-year highs.

The euro declined against the U.S. dollar on expectations of a positive U.S. jobs report, indicating an advancing recovery. Moody’s Investor Services also downgraded the Spanish government’s debt on Thursday with a negative outlook, pressuring the euro. Despite the slight pullback in gold prices from recent highs, unrest in the Middle East and North Africa, inflation hedging in China and the resurfacing of sovereign debt woes in Europe are expected to help support the price of gold.

“The profit-taking is related to a stronger dollar,” said Bernard Sin, the head of currency and metal trading at MKS Finance SA, a bullion refiner in Geneva. Still, “the situation in the Middle East will have a lot of influence” on demand for the metal as a protection of wealth, he said.

"[One]…factor that could see gold and silver higher would be the return of the euro zone sovereign debt crisis,” said Ong Yi Ling, an investment analyst at Phillip Futures in Singapore. “Investors will be looking forward to euro zone policy makers' meeting this Friday. If there's no resolution, perhaps we could see a new high."

(Sources: “Gold Declines as Stronger Dollar, Advance to Record Prompt Investor Sales

Bloomberg, March 8, 2011; “PRECIOUS-Gold rises on rebounding oil; silver ETF at record,” Reuters, March 10, 2011)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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