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January Ends with Gold Up Over 11%

Release Date: 
Tuesday, January 31, 2012

The price of gold moved higher on the last trading day of the month as the euro gained on the dollar. Gold traded at $1745.20 per ounce at 6:54 a.m. Pacific Time on the New York Spot Market with silver at $34.01 per ounce.

Gold saw its largest monthly rise since August with prices increasing more than 11% driven by several factors including weak forecasts for the U.S. and European economies and the Federal Reserve's  pledge of exceptionally low interest rates through 2014.

"Sentiment seems to have improved quite tremendously, I would say. We are now into more bullish territory, more than ever, with the Fed providing enough fundamental support," said Dominic Schnider, head of commodity research at UBS Wealth Management. "I think we have good reasons to believe we are going to test $1,805. The Fed was clearly the most important event," he said.

"With gold starting 2012 at a cracking pace ... gold may be poised to set fresh highs this year but much earlier than many ­­­­- ourselves included ­­­­- would have expected," said Ross Norman, chief executive of Sharps Pixley, in a research note.

"There's been a lot of money put to work here during January. Gold was at the beginning of the year one of the few commodities that everyone felt would be a good performer and people have been investing accordingly," said Ole Hansen, senior manager at Saxo Bank.

Hopes for a Greek debt restructuring deal improved, boosting the euro against the dollar. Portugal's 10-year government bond yields also improved but stayed near euro-era highs of about 17 percent.

(Sources: "PRECIOUS-Gold back in vogue, posts biggest gain since Aug," Reuters, January 31, 2012; "PRECIOUS-Gold edges up; heads for biggest monthly gain since Aug," Reuters, January 31, 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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