Gold Buying 'reflects fears over stability of banks'

A new report has attributed the Gold Price rise in the past few months to ongoing concerns about major financial institutions across the globe, Bloomberg reported yesterday (March 3rd).

Gold Bullion recently broke through the $1,000 per ounce mark for the first time since last March, although it has since cooled to around $910 per ounce as some investors have cashed in their profits.

However, the new study, conducted by leading US company Citigroup, has explained that people are still buying the yellow metal as they seek a safe haven from the precarious economic landscape.

Lead analyst Johan Bergtheil was quoted by the news provider as writing: "Right now gold reflects the fact that many banks would collapse without government support and the fact that such government support is unprecedented in terms of monetary stimulus compared to the past."

That view was backed up last week by Rozanna Wozniak, investment research manager at the World Gold Council, who claimed that demand for gold investment is set to remain strong in the first quarter of 2009.

"While all this uncertainty is out there, investment demand by all accounts is going to sustain gold demand," she told Reuters.

"It's appropriate for investors to put a bit more into gold as an insurance policy against economic contingencies."

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