Safe-haven gold flows continuing as 'the economy is weak'
A top analyst explained yesterday (December 17th) that safe-haven buying of gold bullion is on the rise as the dollar continues to plunge against the euro, Reuters reports.
The US Federal Reserve implemented an aggressive interest rate cut on Tuesday, slashing the base rate to zero to 0.25 percent, highlighting the poor state of the economy.
Now Tom Pawlicki, precious metals and energy analyst at MF Global, has explained that the sheer level of debt which has been unloaded into the markets is boosting the appeal of investing in gold.
He told the news provider: "It's a reflection of the safe-haven flows when people are willing to get zero percent in returns for a three-month commitment from the government. It's just an indication that the prospect of the economy is weak."
Indeed, such are the concerns over the future of the economy that ScotiaMocatta, the global bullion banking division of Nova Scotia, Canada's third-largest bank, has predicted that gold buying will "snowball".
"Looking forward we think the need for safe-haven investments will grow," it said last week in a report entitled 'Metals Matters'.
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