Gold for December delivery settled up $16.80 at $1,830.10 an ounce at the Comex division of the New York Mercantile Exchange and were doubling those gains in after hours trading. The gold price has traded as high as $1,838.90 and as low as $1,794.80 while the spot gold price was adding $25, according to Kitco's gold index.
"Strong two-way interest looks set to keep trade volatile in the coming sessions with Greek default concerns, overall diversification and physical interest to keep gold underpinned," argues James Moore, research analyst at FastMarkets, "but the threat of default and its impact on money-market liquidity may see further long liquidation on rallies as investors lock in profits."The former was in play Tuesday as gold rallied along with stocks, a rarity, as bargain hunting pushed gold higher and modest risk appetite buoyed stocks. Technical traders are looking to see if gold can hold the $1,792 an ounce level, with a break below signaling another leg lower. An article in the Wall Street Journal Tuesday said that BNP Paribas could no longer access U.S. dollars, a rumor that has since been denied, but investors seem to no longer trust the word of companies and politicians and the news helped gold. German chancellor, Angela Merkel, has reaffirmed her commitment to saving Greece from a default after yields on the country's 10 year bonds rose to an euro-era high. Italy also came under heavy pressure in its bond auction Tuesday where the country had to pay up to borrow amid rumors that China might buy Italian bonds. Rumors also swirled that Merkel and French President Sarkozy would make an announcement concerning Greece today. The confusion and lack of direction was helping gold, but its future will still be murky in the short- term. "I see a lot of volatility along with other assets in the marketplace," says Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund, "almost twice of what we normally see on a daily basis." Hicks says that the day-to-day action in gold is difficult to explain as investors will be caught between taking profits and buying protection. Hicks says that markets are prepping for two scenarios -- one where Germany walks away from the Eurozone, something which Merkel has rejected, or that the European Central Bank will be forced to monetize countries' debt, meaning printing money to pay off debt. That's something even the U.S. hasn't done. Hicks sees gold prices at $2,000. "It's not if, it's when ...
Alix Steel in New York.
>To contact the writer of this article, click here: Alix Steel.
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