Gold prices extended the gains last week to set a new record high, as concerns over the outlook for global growth and rising fears that the European debt crisis will spread into Italy, Spain, and France sparked fears across global financial markets and increased demand for safe assets, which boosted gold prices and sent them above $1870 an ounce for the first time ever.
Concerns over the outlook for global growth intensified last week after data from the United States signaled the economic recovery was losing pace, where data from the housing, labor, and manufacturing sectors signaled economic activities continued to slowdown, which spread a huge wave of pessimism over the outlook for growth in the world’s largest economy.
Moreover, investors are still concerned that the European debt crisis will spread into major economies in the Euro Zone region, as Italy, Spain, and France seem to be facing fiscal difficulties, while concerns over the health of the European banking system mounted amid fears European banks are having difficulties in raising funds, which supported gold prices further, as investors sought the safe haven.
We also saw a retracement downside where gold made a low yesterday of $1702. $1680 is the support downside which the metal was unable to break yesterday. If it breaks we could see a level of $1600. The Resistance is $1810 in the upside if manages to break we can expect it again to reach $1900 levels.
Gold prices are most likely to continue their bullish trend over the coming period, especially since the level of uncertainty remains unusually high, as beyond the debt crisis in Europe, the uncertainty surrounding the outlook for global growth is also very high, and that should further boost demand for safe havens including gold.
Complied by Mitesh Rasaikar, CEO (Marketing & Finance), Maya Iron Ores
