An analyst at a leading global investment bank has claimed that the bailout of Citigroup will have a positive effect on the appeal of gold investment, Reuters reported yesterday (November 24th).
The US government agreed to take on $306 billion worth of risky assets from the banking giant, while also pumping in a further $20 billion in order to keep it afloat.
Now Robin Bhar, from Calyon, the investment banking arm of the world's sixth-largest bank, Credit Agricole, has explained that the news has further reinforced financial uncertainty - to the benefit of gold.
He told the news provider: "$20 billion is a lot larger than expected, which is quite negative. The question is, if Citigroup needs all this money, how much do the others need. The bottom line is good news for gold."
Gold prices broke through the $800 per ounce barrier again in the past few days, reversing nearly four weeks of consecutive falls from the late-October high above $900 per ounce.
The recent gains in the dollar appear to now be on the slide and as fears continue to spread, there is likely to be a surge of investors buying gold in the coming months.
Mr. Bhar added: "As interest rates fall, gold becomes more attractive."
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