Gold prices near 7-week high amid Italian woes

Gold prices on both the international and South Korean markets are expected to continue rising as renewed worries on the eurozone, sparked by Italy’s financial woes, prompt investors to scurry for safer assets, data showed Thursday.

On Tuesday, the contract for December delivery hit $1,799.2 per troy ounce on the Comex division of the New York Mercantile Exchange, hitting a near seven-week high. The price closed slightly lower on Wednesday but continued to hover near the $1,800 level.

Demand for the precious metal also increased in South Korea, with the retail price settling at a five-week high of 253,000 won ($226.6) per don on Nov. 9, according to Korea Gold Exchange. The don (3.75 grams) is a Korean unit used to measure gold.

After worries on the eurozone debt risk and the Aug. 5 credit downgrade of the United States spurred gold prices to surge to a record high, they then steadied on the back of eurozone policy efforts to contain the crisis.

Growing fears over Italy’s worsening economic situation, however, again triggered investors to flee to safer assets.

The price for gold slightly slipped following Italian Prime Minister Silvio Berlusconi’s offer to step down, but analysts said the upward trend is likely to continue for the time being.

“Given the macroeconomic conditions, including persisting eurozone risks, gold prices are likely to continue to soar higher to near the $1,800 level,” Son Jae-hyun, an analyst at Daewoo Securities Co., said by phone.

“Moreover, demand for the precious metal is expected to post a solid rise at year-end due to seasonal factors, with the biggest demand likely to be seen in emerging markets such as China and India,” Son said.

Others forecast the yellow metal may surpass the $2,000 mark next year.

“The fundamentals of macroeconomic conditions are favorable to strong gold prices,” Lee Sung-ho, an analyst at Daishin Securities Co., said in a report. He added that based on assessment of five related variables, the gold price may rise more than 20 percent next year to exceed $2,000,”

Lee, however, said the recent steep rise may lead to profit taking, noting that gold price surged 27.4 percent this year.
 

(Yonhap News)