Gold Prices driven by sovereign risk fears

Gold Prices are being pushed up in Europe by rising fears over sovereign debt, it has been suggested.

According to one analyst, the yellow metal is seen by investors as a haven from risk, and the refusal of Gold Prices to drop below $1,110 per ounce in recent times is adding to this reputation.

Eugen Weinberg, an analyst with Commerzbank - the second largest bank in Germany with €625 billion of assets under management and almost 45,000 employees around the world - told Reuters that the market's defence of that price was buoying investors' outlook on gold.

"It is helping the market because if you are looking for security you buy gold," he said to the news provider.

"We are not seeing huge flows, but constant flows. As long as interest rates stay at current levels, it also makes the opportunity cost of buying gold relatively low."

With the latest report from Moody's Investors Service - one of the world's largest credit rating and risk specialists - suggesting that the US and UK are both verging towards losing their AAA credit ratings due to mounting national deficits fears over sovereign debt payments could continue to fuel Gold Prices.

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