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Metals Markets, Analysts React to bin Laden Death

Release Date: 
Monday, May 2, 2011

Gold prices retreated slightly on Monday from last week's record highs as news broke that al-Qaeda leader Osama bin Laden was killed in a U.S.-led operation in Pakistan. Gold traded at $1560.80 per ounce at 7:11 a.m. Pacific Time on the New York Spot Market with silver priced at $46.31 per ounce.

Several traders expect gold's bullish trend to remain intact, considering the macroeconomic and political environment.  "I'm not too concerned about gold at the moment," said Darren Heathcote, head of trading at Investec Australia, adding that the continuously weakening dollar and lofty oil prices would remain supportive of bullion.

One analyst at Citigroup expressed concerns that extremist groups might launch reprisal attacks over the death of bin Laden heightening gold's appeal as a safe haven asset. "The threat from terrorism is not over. Others will fill the gap he has left," said Citigroup Analyst David Thurtell. "I think gold's status as a safe haven is intact."

Analysts at National Australia Bank believe the related selloff in silver may be excessive. "Silver has been the most rapidly appreciating of the metals in the past months and if there was one that looked a bit frothy it was silver," said Ben Westmore, commodities economist at the bank. "This is mostly technical. We expect silver to be in relatively close step with gold."

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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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