Gold News

22/08/07: European gold prices rise

Gold prices in Europe were boosted on Wednesday (August 22nd) thanks to stronger equity markets and physical buying, Reuters has reported.

Analysts have observed that European shares increased on the back of gains for Asian stocks overnight, which in turn rose as a result of speculation about an interest rate cut in the US.

Spot gold reached $656.09 an ounce at 5.54am EDT, but hit $659.30 an ounce overnight. In New York on Tuesday evening, gold was valued at $656.20, which Reuters attributes to ongoing "market jitters".

Walter de Wet from Standard Bank has commented on the current path that gold is taking.

"For now gold seems to be finding direction from stock markets in the absence of any major news and remains therefore relatively quiet and range bound," the analyst observed in a research note seen by Reuters.

There was a large-scale sell-off in financial markets last week and this allowed gold to fall to a seven-week low of $641.10 on August 16th. As analysts have observed, this provided evidence that gold is now behaving very much like other assets, despite its reputation as a safe-haven investment.

Major problems in the US subprime mortgage market sparked the original concern and Reuters has reported that many investors sold gold for cash "to cover margin calls on losses" associated with the meltdown.


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