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Increased Coin Sales Could Support Gold

Release Date: 
Monday, January 30, 2012

The price of gold was essentially flat trading at $1729.00 per ounce at 7:20 a.m. Pacific Time on the New York Spot Market with silver lower at $33.50 per ounce.

Investors concerned over Europe pushed the euro lower as Greece and its creditors failed to agree on terms of a debt agreement prior to a key summit in Europe. EU leaders are expected to agree on a balanced budget rule as they sign off on a permanent rescue fund for the euro zone on Monday. Greeceā€™s Prime Minister appealed to Greek party leaders on Sunday for the unpopular budgetary reforms that could be necessary to save the embattled country.

Despite the uncertainty in Europe, high demand among coin investors may lead the precious metals markets to fresh highs. Coin sales are often an early indicator of increasing interest in precious metals and a possible rally for gold, said Nick Moore, the head of commodity strategy at the Royal Bank of Scotland.

"It looks like the retail buyers have it right, taking advantage of gold's fall from its peak. People have a general feeling of being caught out, and I would expect to see a lot more interest from the professional end of the market as a result," Moore said. Retail investors "have seen the good value gold is offering."

(Sources: "Gold's Fall Draws Coin Fans," Wall Street Journal, January 30, 2012; "PRECIOUS-Gold set for biggest daily fall in a month," Reuters, January 30, 2012)

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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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