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Gold Higher on Optimism for Europe

Release Date: 
Friday, October 21, 2011

The price of gold moved higher Friday on optimistic reports for European aid measures that may avoid the spread of the regional debt crisis. Gold traded at $1645.20 per ounce at 7:18 a.m. Pacific Time on the New York Spot Market, up $24, on speculation that European authorities were prepared to extend aid at levels near $1 trillion.

Recently, investors had turned more pessimistic on the news that Germany and France were in disagreement about how to structure funds for the European Financial Stability Facility, the region's rescue fund. The nations are the fund's largest contributors and have been instrumental in European negotiations.  European leaders are meeting in Brussels this weekend as they seek to contain the region's debt crisis.

"Gold is moving in line with other commodity asses and equities on a more positive sentiment about Europe," said Credit Suisse analyst Tom Kendall.

Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said gold "offers an attractive buying opportunity" at current levels given the pullback from record levels last month.  "Gold is still seen as a safe haven or a store of value at least in the mid to long term," he added.

(Sources: "Gold Price Surges as Europeans Prepare to Fire up Printing Press,"

International Business Times, October 21, 2011; "Gold bounces as German comments boost euro," Reuters, October 21, 2011; "Gold Advances as Drop to a Two-Week Low Increases Demand From Investors," Bloomberg, October 21, 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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