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March 21, 2013

Release Date: 
Thursday, March 21, 2013

Cyprus continued to dominate the news and precious metals markets as the EU demanded that Cyprus raise billions of euros for a bailout fund or face the prospect of expulsion from the euro zone. Gold rose more than $8 in morning trading on the New York Spot Market while silver gained nearly 1.5%.

The European Central Bank reportedly plans to cut liquidity to Cypriot banks while the EU takes steps to “banish” Cyprus from the euro zone. No country has left the euro zone since it was first formed in 1998.

"The Cyprus situation has ignited purchasing of gold from the public who are now becoming concerned that the same can happen where they live," said BullionVault’s Miguel Perez-Santalla. (“Gold hits near 1-month high on Cyprus debt fears,” Reuters, 3/21/12.)

CNBC reports that gold “has broken the mid-February trendline resistance around $1,613 on price charts, suggesting scope for further gains, according to technical analysts. Prices were on track for their best weekly performance since end-November.”

Investors are also acquiring gold in light of the recent FOMC statement affirming its commitment to quantitative easing. “’We may have seen some technical momentum gathering ...but we are generally seeing a lot of arguments in favor of gold today, with the Fed reiterating they will continue their quantitative easing and the uncertainty in Cyprus,’" a Commerzbank analyst told CNBC. (Gold at 4-Week High on Cyprus Jitters, US Fed, CNBC, 3/21/13.)

HSBC chief commodity analyst James Steel agreed: "The overnight evaluation of the FOMC (Federal Open Market Committee) statement is being treated a little more bullishly than it was than the first knee-jerk analysis… You still can't discount the safe-haven impact from Cyprus -- it hasn't gone away yet." (Gold Prices Gain as Fed, Cyprus Offer Support, theStreet, 3/21/13.)

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