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Gold Investors May Step In On European Weakness

Release Date: 
Monday, December 12, 2011

Gold prices were lower on Monday as investors reacted to last week's European Union summit aimed at resolving the region's debt crisis. The U.S. dollar was sharply higher against a basket of currencies as the continued uncertainty in Europe lowered the euro against the greenback. Gold traded at $1665.40 per ounce and silver at $31.19 per ounce on the New York Spot Market at 6:14 a.m. Pacific Time.

Analysts at KASB Securities commented that gold could be oversold from a technical perspective, noting that investors may buy on weakness. Credit Agricole analyst Robin Bhar, stated "underlying stresses and money market stresses and the dash for cash [in the financial markets are] dealing a blow to gold ... the next couple of days are going to be crucial technically for gold," she commented.

This week, investors are likely to monitor bond sales by Italy and Spain. Yields for those nations may rise again as last week the European Central Bank struck a hawkish tone by saying the bank is opposed to providing aid to Europe through additional bond purchases.

(Sources: "PRECIOUS-Gold falls over 1 pct on technicals, Europe worry lingers," Reuters, December 12, 2011);; "PRECIOUS-Gold touches 3-wk lows as crisis boosts dollar," Reuters, December 12, 2011; "Gold prices fall as Europe worries rattle market," MarketWatch, December 12, 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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