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Wednesday, December 19th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Gold Will Not Trade under $ 1,540

Gold remained above $1,540 an ounce in Europe trading on Friday, as its appeal was boosted by concerns over the lack of consensus over measures to tackle the euro zone debt crisis.

Spot gold was bid at $1,542.80 an ounce on Friday morning trading compared to $1,543.60 in late New York trading on Thursday, despite the dollar’s recovery against the euro.

The euro went down 0.2 percent among concerns over the European Central Bank’s solid rejection of any sort of debt restructuring measures for Greece – which is favoured by many euro zone members, Germany in particular.

Although typically a stronger dollar weighs down on gold as it becomes more expensive for holders of other currencies, therefore making it a less attractive asset, the recent euro zone debt concerns are supporting gold in its own right.

Ole Hansen, senior manager at Saxo Bank, said “A weaker euro driven by the uncertainty is Europe tends not to hurt gold… Gold is staying where it is, because it gets support from that uncertainty.”

Hansen added: “We bounced very strongly from the correction in May, and that has increased confidence that gold is heading higher eventually.”

Gold is firm in the $1,520 – 1,555 range even as markets slow down for the typically quieter summer period. Analysts are expecting gold to consolidate, or even pull back, in the immediate future.

On Friday, Swiss bank UBS, released a note saying: “We are bullish on gold’s prospects for the rest of this year, but would not rule out a pullback over the summer months.”

The note mentioned three major reasons to why the price of gold is likely to reverse: “The end of the Fed’s QE2, the traditional seasonal slowdown, and the potential for gold prices to tumble during an extreme risk-off event when cross-asset correlation is high.”

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