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Gold Investment could rise after US bank 'stress tests'

The appeal of Gold Investment could be boosted tomorrow (May 7th) if the government's 'stress tests' on US banks show that they are in need of further financial support, Reuters reports.

According to the news provider, industry figures believe that about ten of the 19 largest banks may require additional capital to tackle the global economic crisis.

With one source claiming that Bank of America is searching for an investment of $34 billion, anyone Buying Gold for the long term could reap rewards if such institutions continue to struggle.

"If the stress test results are not good and if the banks need to raise more money, it just means the financial system is still not out of the woods yet and investors could turn back to risk aversion again," a Singapore-based dealer told Reuters.

"When we move back to risk aversion, then the safe havens should benefit and the riskier assets such as stocks should retrace."

Those comments come after Walter de Wet, an analyst at Standard Bank, the largest bank in Africa, claimed that some investors are viewing the current gold price as a good buying opportunity.

"There is some dollar weakness, but a lot of people are also thinking $885 an ounce is a good entry point into the metal," he told the news provider.

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