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Today in London, gold gained after a three day flat due to the combined effect of the weaker dollar and the growing conflict in the Middle East accompanied by higher demand for yellow metal seen as a safe haven investment.
The US Congress failed to achieve a consensus with the President Barack Obama over the agreement on the nation’s budget. In affect the US Dollar Index fell with the upcoming automatic spending cuts and tax increases scheduled to occur next year, also known as the fiscal cliff. At the same time Ehud Barak – the Israeli Defense Minister said that for the first time in four year the Israel army is ready to invade into Gaza territory.
According to David Govett – head of precious metals at Marex Spectron Group in London – The gold gain is in response of the dollar value crippled by the infertile negotiations in the Congress and the inability to treat properly the fiscal cliff issue. He added that in turn the escalating conflict in the Middle East also led to some buying while air strikes terror both Israelis and Palestinians.
In London by 9:47 am, gold for immediate delivery rose 0.5 percent up to $1,722.54 per ounce.
In New York on the Comex, yellow metal for delivery in December gained 0.4 percent reaching $1,722.10 per ounce.
A recent report data showed that assets in ETF gold products also gained 4 metric tons, hitting a record of 2,603.7 tons on the 16th November. Holdings and prices rebounded this year while central banks around the globe tried to get a firm foothold on their economies.
Hedge funds raised their net-long position by 7.7 percent to 140,162 futures and options. According to U.S. Commodity Futures Trading Commission data – for the first time since five weeks hedge funds have increased bets on the rising gold prices.
The situation in the Middle East is still insecure after the wave of uprisings last year known as the Arab Spring. Yet the military actions between Israel and Hamas, which runs along the Gaza Strip, enforce even more the delicate status in the region.
Immediate delivery silver is up by 0.9 percent to $32.6175 per ounce.
Platinum rose 0.2 percent reaching $1,562.25 per ounce.
Palladium gained 0.4 percent to $630 per ounce.