21/08/07: Gold rises as bargain hunters pounce

Gold rose again on Tuesday (August 21st) after Japanese speculators continued to register their interest.

A new report from Reuters indicates that spot gold increased to $658 an ounce from $657.60 an ounce on Monday evening in New York.

It reportedly peaked at $659.70 due to the strength of the yen against the dollar, which prompted Japanese investors to buy gold

Gold reached a seven-week low of $641.10 towards the end of last week and analysts have pointed out that this represents a significant change in its role in the investment market. Traditionally, gold was seen as a safe-haven during financial instability, but a general sell-off in the financial markets in recent weeks has seen gold treated in an almost identical fashion.

Indeed, gold investment is now often seen as a means to diversify a portfolio, rather than an investment option when turbulence hits.

Demand remains high, however, as a dealer in Hong Kong told Reuters.

"I think people still expect to see a strong demand for gold. We've seen reports of consumption growing by about 20 per cent in the Middle East for instance," he said.