EuroZone Crisis Continues to Impact Gold Prices

The US dollar continues to rise as investors choose cash over gold as their main safe haven. Further bad news from Eurozone has not helped gold prices. Other than German bonds, yields on all the other European government bonds are on the rise as the fear of Eurozone debt contagion prompts investors to sell. Increases in the sale of government bonds is not limited to southern tier European countries like Italy and Spain, but includes debt for financially healthier northern tier countries like Finland, Netherlands and France as well.

Price-Supportive Signs Fail to Push Up the Value of Gold

Sharp fall in stock market values anchored gold earlier, but with the stocks making up for their losses, gold gains are going down. Gold prices remain weak in spite of certain typically price-supportive signs like the West Texas Intermediate crude oil crossing $100 per barrel. On the New York Mercantile Exchange Comex division, December gold futures are at $1,775, down by $8 an ounce.

Weakness in Equities Affect Gold Prices

According to analysts, gold prices have also been affected by weakness in equities. To make up for losses in stocks, some investors have resorted to selling profitable positions like gold. Although currently the strength of dollar is keeping gold prices down, the yellow metal is gaining ground in terms of euro because of the increase in the sale of European bonds. If the rally in dollar comes to an end, the metal’s strength in terms of euro is likely push up its dollar denominated price as well.

Outlook for Gold Prices

Registered principal and managing member of A.L Waters Capital Arnie Waters believes that in spite of the current weakness, by the 1^st of December gold will reach $1,850 -$1,860 and push to $2000 within next 6 weeks. He further adds that in case Eurozone breaks up; the markets would be significantly disrupted increasing the value of gold as a safe haven.

According to Country Hedging market analyst and commodity trading adviser Sterling Smith, fresh fundamental news may be required to push up gold prices. News like the Federal Reserve setting out on a liquidity program or the European Central Bank deciding to mint money is likely to do the trick.