Gold uptrend continues on Europe debt crisis

LONDON/MUMBAI - Gold prices have edged up on Monday trade due to continued concerns on Eurozone debt crisis with jewellery demand in Asian region giving firm support to prices.

US gold futures for December delivery climbed 1.1% to $1768.60 but subsequently fell to $1765, still 0.56% higher than previous close.

Greek Prime Minister George Papandreou has agreed to step down to allow the creation of a national unity government intended to secure interational financing and avert a collapse of the country's economy. With Greece due to run out of money in a few weeks, the European Union told bickering political parties to explain by Monday evening how they would form a unity government to get the 130-billion-euro ($180-billion) emergency funding, Reuters reported.

Macro-economic sentiments from the Eurozone and US economy continues to provide firm support for gold as a firm action to end the sovereign debt crisis is yet to emerge, analysts said.Bullion is celebrating its 11th year of bull run having touched record high of $1921.15 on September 6 this year.

Holdings in exchange-traded products backed by gold gained 3.1 metric tons to 2,284.6 tons on Nov. 4, the highest level since Aug. 23, Bloomberg reported.

Silver for immediate delivery fell 0.3 percent to $34.05 an ounce. Palladium was 0.3 percent lower at $654.25 an ounce. Platinum declined 0.2 percent to $1,630.75 an ounce. 

"I don't see it (gold) as the end-all investment many do, but I don't see it as a bubble that will burst and drive it back down below $1,000 per ounce, either," according to renowned market analyst Gary Silverman in Timesreocrdnews.com.

Gold has acted with aplomb. Faced with clear signs the economic system is in a state of grave concern (witness the VIX or fear index above 30) and it has rallied accordingly. Gold is still about 10% below its all time high of $1920 seen early this September when COMEX futures traders took profit, but last Fridays figures released by the CFTC suggest that they may now be rebuilding long positions... the weak longs have been shaken from the market. Encouragingly that sell-off by futures traders saw only 25 tonnes of selling from the gold ETF holders (which represents less than 1% of holdings) which for many will confirm the view that these investors are in for the long haul and their confidence is not shaken by the latest squiggle or bump in price, according to Ross Norman, CEO of Sharps Pixley, London. 

"We expect gold to test overhead resistance at $1772 which, if breached convincingly, could see buy stops triggered to take gold into the low $1800's where it belongs. This being the seasonally strong quarter for gold buying, the tide is very much in favour of the gold bulls at this time." 

At India's Multi-Commodity Exchange of India , December gold futures will witness an uptrend this week although it failed to break resistance level of 28074, according to Angel Commodities. Support levels 27680, 27044, 28275, 28550. Gold futures had risen 1.25% last week and uptrend may continue tracking global cues.

Source: CommodityOnline