Gold prices were little changed on Wednesday, as investors remained concerned that talks between French President Nicolas Sarkozy and German Chancellor Angela Merkel won’t solve the European debt crisis, which supported gold prices on Wednesday to hold near its record high set last week.
The uncertainty that continued to surround the outlook of the European debt crisis continues to provide gold prices with strong bullish momentum, while signs of slowing global growth also provided gold prices with more momentum to rise, as investors continue to target lower yielding and more safe assets including gold.
We don’t expect demand for safe haven to diminish over the coming period, since traders will continue to focus their attention on the European debt crisis and the slowing economic activities in the United States. Moreover, speculations that the Fed will eventually undertake QE3 are mounting, and that should keep the bullish momentum going for gold prices. Overall, we expect gold prices to extend their rise over the coming period, albeit we expect volatility to remain dominant around global financial markets.
(Complied by Mitesh Rasaikar, CEO (Marketing & Finance), Maya Iron Ores)