Gold Prices See Biggest One-Day Rise Since October End

On January 3^rd, 2012, gold prices went up 2.5%. This was the biggest gain in one day for the precious metal, since October end. With this, gold was able to make its way back from the losses that it had been experiencing the previous week. Eventually, it hit $1609 per ounce. Nevertheless, in a few hours, the price fell. It was followed by a climb that reached a high of $1613. The increase in price was quite strong in contrast to the low it had hit a few days ago.

Key Reasons for Rise - Issues in Middle East and Disagreements between US and Iran

One of the key reasons attributed to the rise is the escalating issues in the Middle East. Another, is the disagreement between the US and Iran. Typically, gold is a hedge, a safe haven for economic situations that are troubled. However, the recent years have seen the price of the asset going through the roof during times of financial crisis. It then dropped towards the last six months of 2011. This happened despite the debt crisis in the eurozone.

A commodity strategist with ANZ stated that though gold does not function as a safe haven when there are financial issues, it does act as a hedge in times of geopolitical risks in the real-world. The recent increase in the price of gold indicates that there could be further rises in the near future too. However, analysts are skeptical about whether this will come to pass.

Gold Prices likely to Continue Rising

In the past few days, there have been a few technical analysis events. Among them, of importance was the price of gold falling to $1,522 as 2011 ended. The price was $10 less than the low that gold hit in September 2011.

The price of gold increasing sharply to reach the high it did in the past two days can be a signal that people should buy into it. This may result in the market for the precious metal returning to $1,900 and above - an all-time record for gold. This view has been supported by a few who specialize in commodities. According to them, it is possible that gold may take some time to get back to its peak.